module 2: us treasury’s hafa program home affordable foreclosure alternatives 13 2-1
TRANSCRIPT
Module 2:Module 2:US Treasury’sUS Treasury’sHAHAFA FA ProgramProgram
Home Affordable Foreclosure Alternatives13
2-1
Supplemental Directive 09-09RSupplemental Directive 09-09R
• Nov. 30, 2009 HAFA introduced
• April 5, 2010 Effective date
• HAMP servicers must participate in HAFA
• Revised March 26, 2010
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Supplemental Directive 10-18Supplemental Directive 10-18
• Issued Dec.28,2010
• Effective Feb. 1, 2011
• Made significant changes
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HAHAFAFA Short Sale
Deed-in-Lieu
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Home Affordable Foreclosure Alternatives 2-4
HAHAFAFA Eligibility = HA Eligibility = HAMMP EligibilityP Eligibility
• Personal residence, 1-4 family
• $729,750 balance (SFR)
• 1st position loans
• Originated on or before 1-1-09
• Payment on 1st loan exceeds 31% of gross income
• Hardship
• Delinquent or default reasonably foreseeable
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(Deleted by SD 10-18)
HAHAFAFA Features Features• Pre-approved short sale
• Specified time lines
• Commissions protected
• Full release of liability on 1st and subordinate loans
• Foreclosure sale suspension
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HAHAFAFA Features Features (cont’d.)(cont’d.)
• Payment forbearance or reduction
• $3,000 to Seller
• Servicer incentives
• Up to $6,000 for subordinate lien holders
• Investor reimbursement for subordinate lien releases
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Who’s ParticipatingWho’s Participating
• All servicers in HAMP–1st mortgages
–Servicers establish policies based on investor guidelines
–Investors in non-GSE loans may not approve HAFA short sales
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Who’s Participating Who’s Participating (cont’d.)(cont’d.)
• Fannie & Freddie–Are the investors
–Establish separate guidelines
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Borrower SolicitationBorrower Solicitation
• Borrowers solicited if delinquent
• 14 days to respond
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Foreclosure SuspensionForeclosure Suspension• Potentially eligible
borrowers must be considered for HAFA:– Prior to commencing
foreclosure– Before foreclosure sale is
conducted
For non-GSE loans: Pursuant to servicer’s policy
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Foreclosure Suspension Foreclosure Suspension (Cont’d.)(Cont’d.)
• Fannie & Freddie–Special permission
required if foreclosure sale is sooner than 60 days
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Foreclosure Sale is SuspendedForeclosure Sale is Suspended
• While determining eligibility
• During SSA term
• Pending RASS approval
• Prior to closing
Troubled borrowers should start
HAFA process early17
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Borrower Already in HABorrower Already in HAMMPP
• Servicer Must Consider Servicer Must Consider Borrower for HAFABorrower for HAFA… … Within 30 days from date the borrower:– Does not qualify for trial
modification– Does not complete trial
modification– Is delinquent on modification
–Requests a Short Sale
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Borrower Not in HABorrower Not in HAMMPP
• Servicer must consider borrower within 30 days from date the borrower:
–Requests a Short Sale
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If Borrower Not in HAIf Borrower Not in HAMMPP
• Servicer determines eligibility–RMA (Request for
Modification & Affidavit)
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Borrower cannot be applying for modification while pursuing a short sale or vice versa.
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Bankruptcy?Bankruptcy?• Considered for HAFA if
requested
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RMARMA
Request for
Modification and
Affidavit
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Wells Fargo calls it a RFAA
RMA Pg. 1
For HAFA:•Sell property•Primary residence•Owner occupied
Explain Hardship
Other liens
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RMA Pg. 2Income:Must include all except alimony, child support and/or separate maintenance payment
Assets:Do not include life insurance or retirement accounts
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Paragraph 5 is for modifications
RMA Pg. 3
Use servicer’s form which servicer should have modified for short sale
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HAFA Short Sale Flow ChartHAFA Short Sale Flow ChartDetermine if Seller/Borrower meets HAFA eligibility.
Servicer has 30 days to determine eligibility, and issue or deny the SSA.
Borrower requests short sale & submits complete package including RMA
SSA & RASS sent to borrower.• Includes list price or Minimum Net Proceeds
SSA returned to servicer:•Within 14 days•Copy of listing•Other lien info
Marketing:120 days minimum Extensions possible, up to 12 months total
Upon Contract to Purchase:Submit RASS & contract within 3 Biz days of contract acceptance
Servicer approves or disapproves
contract within 10 Biz
Days
Closing. Servicer cannot require closing sooner than 45 days from contract acceptance. Seller receives $3,000 relocation assistance & is released from all liability on all liens.
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Property must be
listed
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Determine Seller’s EligibilityDetermine Seller’s Eligibility
Principal residence
1st mortgage originated on or before 1-1-09
Delinquent or default reasonably foreseeable
Unpaid balance $729,750 or less
Financial hardship
Step 1Step 1
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Principal Residence Principal Residence Exemption:Exemption:
• Vacant or rented to a non-borrower up to 12 months prior to issuance of:– SSA or– Alt RASS and
• Borrower has not purchased another home during 12 months prior to issuance of SSA
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11stst Position/Pre 2009 Position/Pre 2009
• Eligibility based on 1st loan balance & payments• Originated on or before Jan. 1, 2009
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Delinquent or Default ForeseeableDelinquent or Default Foreseeable
• DelinquentDelinquent–more than 60 days latemore than 60 days late
• Imminent default evaluated by Imminent default evaluated by servicer based on borrower’s debts, servicer based on borrower’s debts, expenses, income & assetsexpenses, income & assets
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Maximum Unpaid BalanceMaximum Unpaid Balance
• 1 Unit: $729,750 • 2 Units: $934,200 • 3 Units: $1,129,250 • 4 Units: $1,403,400
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Financial HardshipFinancial Hardship• Reduction/loss of incomeReduction/loss of income• Financial circumstances changeFinancial circumstances change• Increase in paymentIncrease in payment• Increased expensesIncreased expenses• No cash reservesNo cash reserves• Excessive debtExcessive debt• Other reasonsOther reasons
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Financial Information & Payment/Income Financial Information & Payment/Income RatiRatioo
• Financial info may be required by Financial info may be required by servicerservicer
• Treasury HAFATreasury HAFA: Payment not required : Payment not required to exceed 31% of borrower’s income for to exceed 31% of borrower’s income for non-GSE loans non-GSE loans
• Fannie & Freddie require payment to Fannie & Freddie require payment to exceed 31% of gross incomeexceed 31% of gross income
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Request Short SaleRequest Short Sale• Servicer’s forms– Use servicer’s forms– Complete all forms
• Complete RMA
• IRS Form 4506T
• List of servicers at: www.MakingHomeAffordable.gov
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Step 2Step 2
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Servicer EvaluationServicer Evaluation
• Compares Foreclosure/REO proceeds to Short Sale proceeds based on investor requirements
• Denial– Not eligible– Does not meet investor
criteria– Reasons explained
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Step 3Step 3
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Issuance/Denial of SSAIssuance/Denial of SSA
• 30 calendar days from receipt of documents and borrower’s request for HAFA short sale consideration
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Step 3Step 3
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SSA & RASS IssuedSSA & RASS Issued• SSA: Short Sale Agreement– Offers borrower pre-approved short sale – 14 days to accept & return
• Property must be listed
• RASS: Request for Approval of Short Sale– Kept until seller accepts a buyer’s offer
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Step 4Step 4
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Listing the Home
• Required when SSA returned
• Licensee must sign SSA
• Copy returned with SSA
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SSA List Price SSA List Price or Minimum Net or Minimum Net
• Servicer sets:– List price or–Minimum net proceeds
• No increase in minimum net during term of SSA
• Are terms realistic???
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MarketingMarketing
• 120 days minimum
• Extensions possible for up to 12 months total
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Step 5Step 5
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RASS & Purchase AgreementRASS & Purchase Agreement
• Contract & Addenda
• RASS
• Buyer– Proof of funds or
pre-approval letter
• Subordinate lien info
• 3 Biz Days to submit to servicer
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Step 6Step 6
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Approval or DisapprovalApproval or Disapproval
• 10 Biz days
• Approval required if minimums are met
• Cannot require commission reduction
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Step 7Step 7
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ClosingClosing
• Can be ASAP
• Servicer cannot require sooner than 45 days
• 45 days begins at contract acceptance
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Step 8Step 8
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