Hafa slideshow
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HAFA: Sounds Simple But the Devil is in the Details
HAFA Highlights
•Ten day approvals
HAFA Highlights
HAFA Highlights•Ten day approvals
•Satisfaction of all borrower debts
•Ten day approvals
•Satisfaction of all borrower debts
•Consistent process and forms between servicers
HAFA Highlights
HAFA Definitions
•DIL: Deed-in-Lieu
Definitions
•DIL: Deed-in-Lieu•HAFA: Homes Affordable Foreclosure Assistance
Definitions
•DIL: Deed-in-Lieu•HAFA: Homes Affordable Foreclosure Assistance•Incentive Compensation: Payments designed to provide
incentives for borrowers, investors and lenders to participate in the HAFA program
Definitions
•DIL: Deed-in-Lieu•HAFA: Homes Affordable Foreclosure Assistance•Incentive Compensation: Payments designed to provide
incentives for borrowers and lenders to participate in the HAFA program
•RASS: Request for Approval of Short Sale
Definitions
•DIL: Deed-in-Lieu•HAFA: Homes Affordable Foreclosure Assistance•Incentive Compensation: Payments designed to provide
incentives for borrowers and lenders to participate in the HAFA program
•RASS: Request for Approval of Short Sale•Relocation Assistance: Incentive Payment to Borrower
Definitions
•DIL: Deed-in-Lieu•HAFA: Homes Affordable Foreclosure Assistance•Incentive Compensation: Payments designed to provide
incentives for borrowers and lenders to participate in the HAFA program
•RASS: Request for Approval of Short Sale•Relocation Assistance: Incentive Payment to Borrower•RMA: Request for Modification and Assistance
Definitions
•DIL: Deed-in-Lieu•HAFA: Homes Affordable Foreclosure Assistance•Incentive Compensation: Payments designed to provide
incentives for borrowers and lenders to participate in the HAFA program
•RASS: Request for Approval of Short Sale•Relocation Assistance: Incentive Payment to Borrower•RMA: Request for Modification and Assistance•SSA: Short Sale Approval
Definitions
• DIL: Deed-in-Lieu• HAFA: Homes Affordable Foreclosure Assistance• Incentive Compensation: Payments designed to provide incentives
for borrowers and lenders to participate in the HAFA program• RASS: Request for Approval of Short Sale• Relocation Assistance: Incentive Payment to Borrower• RMA: Request for Modification and Assistance• SSA: Short Sale Approval• Vacancy Date: Date that borrower has to vacate the property
Definitions
General Terms and Conditions
General Terms
and Conditions
Cannot Complete
Foreclosure
Can Require Payment
s
General Terms
and Conditions
Must Waive
Deficiency Rights
General Terms
and Conditions
Servicer, Investor,
Lien Holders & Borrowers
General Terms
and Conditions
Prior to Sale Servicer Must
Determine Acceptable
Minimum Net Proceeds
General Terms
and Conditions
Exception for Non-Profits that Intend to
Rent or Re-sell to Borrower
HAFA now allows servicer to enter into a borrower deed for lease or borrower repurchase
agreement
General Terms
and Conditions
Servicers must post their eligibility matrix on their website by October
15, 2011
Qualifying for HAFA
Borrowers Principal ResidenceRelease of LiensRelease of Liens
Can still qualify if temporarily unoccupied
Borrower can’t buy a 1-4 unit property
during this 12 month period
Up to 12 months before date of SSA
Qualifying for HAFA
Borrowers Principal Residence
Property Cannot be Not Condemned
Borrowers PropertyBorrowers Property
CondemnationCondemnationQualifying for HAFA
Borrowers Principal Residence
Property Cannot be Not Condemned
First lien Originated on or Before 1-1-09First LienFirst Lien
Borrowers PropertyBorrowers Property
CondemnationCondemnationQualifying for HAFA
Borrowers Principal Residence
Property Cannot be Not Condemned
Delinquent or Reasonably Foreseeable Delinquency
First lien Originated on or Before 1-1-09
DelinquencyDelinquency
First LienFirst Lien
Borrowers PropertyBorrowers Property
CondemnationCondemnation
Borrower qualifies if in foreclosure or in
bankuptcy
Qualifying for HAFA
Borrowers Principal Residence
Property Cannot be Not Condemned
Delinquent or Reasonably Foreseeable Delinquency
First lien Originated on or Before 1-1-09
Principal Balance Less Than $729,725Principal BalancePrincipal Balance
DelinquencyDelinquency
First LienFirst Lien
Borrowers PropertyBorrowers Property
CondemnationCondemnation
Includes arrearages
Qualifying for HAFA
Borrowers Principal Residence
Property Cannot be Not Condemned
Delinquent or Reasonably Foreseeable Delinquency
First lien Originated on or Before 1-1-09
Principal Balance Less Than $729,725
Financial Hardship
Principal BalancePrincipal Balance
Financial HardshipFinancial Hardship
DelinquencyDelinquency
First LienFirst Lien
Borrowers PropertyBorrowers Property
CondemnationCondemnation
Hardship demonstrated by Hardship Affidavit or RMA
Qualifying for HAFA
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE AGREEMENT
PROCESS
Even if borrower
fails to respond
servicer can still consider
them for HAFA
THE HAFA SHORT SALE AGREEMENT
PROCESS No longer need
to show monthly mortgage payment
exceeds 31% of monthly gross
income
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE AGREEMENT
PROCESS
THE HAFA SHORT SALE
AGREEMENT (SSA)
THE HAFA SHORT SALE
AGREEMENT (SSA)General Terms
Borrower must authorize servicer to share personal financial info necessary to complete the short sale (including to
US Treasury Department)
Buyer cannot sell within 90 days of closing
Notice that sale must be arm’s
length transaction
Monthly payment, if any – can’t exceed 31% of gross
monthly income
Lender agrees to not complete foreclosure while there is a valid
SSA
Borrower agrees to provide info and sign documents to
verify program eligibility
Maintain interior/exterior for
marketability
Work to clear
any title issues
Cancelation or
contingency clauses for
PA
THE HAFA SHORT SALE
AGREEMENT (SSA)Key Marketing Terms
Must be listed with licensed real estate agent
Commission cannot exceed 6%
Borrower must cooperate with listing broker
and respond to servicer inquiries
Either list price approved by servicer or expressed
as net priceOn or before 10-15-11 each
servicer must have
plan to periodically re-evaluate
property value
THE HAFA SHORT SALE
AGREEMENT (SSA)Closing and Other
Expenses
Reasonable and customary for community where property is located
Servicer must describe the costs that can be deducted
Real estate commission to be paid, not to
exceed 6%
Notice if servicer hires contractor to assist broker
THE HAFA SHORT SALE
AGREEMENT (SSA)Duration of SSA
A fixed term not less than 120 calendar days from
effective date
Up to 12 months
Set out terms under which SSA can be terminated
THE HAFA SHORT SALE
AGREEMENT (SSA)Borrower Financial
Liabilities/Incentives
Servicer will allow a portion of proceeds to
subsequent lien holders in exchange for
full satisfaction of the debt
$3,000 relocation incentive
to borrower
THE HAFA SHORT SALE
AGREEMENT (SSA)Notice
Notice that short sale may have income tax consequencies
Notice that short sale may have a negative impact on
credit score
THE HAFA SHORT SALE
AGREEMENT (SSA)Early Termination
Borrower qualifies for modification
Borrower bring account currentBorrowers
financial situation improves
significantly
Post SSA Purchase Agreement
Post SSA Purchase Agreement
3 days
Post SSA Purchase
Agreement
3 days
10 days
Post SSA Purchase
Agreement
Pre-SSA Purchase Agreement
Pre-SSA Purchase Agreement
3 days
Pre-SSA Purchase Agreement
3 days
45 days
Pre-SSA Purchase Agreement
Every 15 days
45 days
3 days
Pre-SSA Purchase Agreement
Every 15 days30 days
3 days
Was 45
days
Pre-SSA Purchase Agreement
Every 15 days
30 days
3 days
Pre-SSA Purchase Agreement
Pre-SSA Purchase Agreement
3 days
30 days Every 15 days
Pre-SSA Purchase Agreement
3 days
30 days
Every 15 days
Can be given while considering borrower
for HAFA
Pre-SSA Purchase Agreement
First Lien Holder Requirements
Must have written policy with respect to requiring monthly paymentsFirst Lien
Holder Requirements
PaymentForbearance
PaymentForbearance
Must have written policy with respect to requiring monthly payments
Expenses of HAFA must be paid by servicer unless short sale fails
First Lien Holder Requirements
PaymentForbearance
PaymentForbearance
HAFA ExpensesHAFA Expenses
Must have written policy with respect to requiring monthly payments
Expenses of HAFA must be paid by servicer unless short sale fails
All lien holders must release lien and waive rights to seek deficiency
First Lien Holder Requirements
PaymentForbearance
PaymentForbearance
Release All LiensRelease All Liens
HAFA ExpensesHAFA Expenses
Must have written policy with respect to requiring monthly payments
Expenses of HAFA must be paid by servicer unless short sale fails
All lien holders must release lien and waive rights to seek deficiency
First Lien Holder Requirements
Mortgage InsuranceMortgage Insurance
Mortgage insurers have to agree to not seek payments from borrower
PaymentForbearance
PaymentForbearance
Release All LiensRelease All Liens
HAFA ExpensesHAFA Expenses
Subsequent Lien Holder
Requirements
Cannot Require Payment From Borrower or Real Estate Agent Subsequent
Lien Holder Requirements
PaymentsPayments
Cannot require borrower or real estate agent to
make payment in exchange for satisfying debt
Cannot Require Payment From Borrower or Real Estate Agent
All payments to Lenders must be shown on HUD statement
Subsequent Lien Holder Requirements
PaymentsPayments
HUD StatementHUD Statement
No payments outside closing allowed
Cannot Require Payment From Borrower or Real Estate Agent
All payments to Lenders must be shown on HUD statement
Lien holders must release liens and waive rights to seek deficiencies
Subsequent Lien Holder Requirements
PaymentsPayments
HUD StatementHUD Statement
Release LiensRelease Liens
Servicer can pay up to a total of $6,000 for all subsequent liens except for non-mortgage liens
6% cap per lien no longer
applies
Cannot Require Payment From Borrower or Real Estate Agent
All payments to Lenders must be shown on HUD statement
Lien holders must release liens and waive rights to seek deficiencies
Subsequent Lien Holder Requirements
Lien holders cannot charge expenses of HAFA short sale to borrower unless short sale fails
PaymentsPayments
HUD StatementHUD Statement
Release LiensRelease Liens
HAFA ExpensesHAFA Expenses
If short sale fails, they can add
expenses to the balance
owed
Incentive Payments
1,500.00 for a successfully closed HAFA short sale or DIL
Incentive Payments
ServicersServicers
1,500.00 for a successfully closed HAFA short sale or DIL
Each subordinate lien holder may be paid up to 6% of the unpaid principal balance of their loan from the closing proceeds; however, the total cap for such payments is $6,000.00
Incentive Payments
Investor will be repaid on a one-for-three basis
Subordinate Liens
Subordinate Liens
ServicersServicers
6% cap to individual lien holder no longer applies
$6,000 cap does not apply to non-mortgage liens
1,500.00 for a successfully closed HAFA short sale or DIL
Each subordinate lien holder may be paid up to 6% of the unpaid principal balance of their loan from the closing proceeds; however, the total cap for such payments is $6,000.00
The borrower is entitled to a $3,000.00 relocation assistance payment
Incentive Payments
Investor will be repaid on a one-for-three basis
BorrowersBorrowers
Subordinate Liens
Subordinate Liens
ServicersServicers
Borrower can use this to pay transaction costs but not for
payment to lien holders
1,500.00 for a successfully closed HAFA short sale or DIL
Each subordinate lien holder may be paid up to 6% of the unpaid principal balance of their loan from the closing proceeds; however, the total cap for such payments is $6,000.00
The borrower is entitled to a $3,000.00 relocation assistance payment
Incentive Payments
InvestorsInvestorsInvestor will be paid a maximum of $2,000.00 for allowing a portion of HAFA short sale proceeds to be paid to subordinate lien holders.
Investor will be repaid on a one-for-three basis
BorrowersBorrowers
Subordinate Liens
Subordinate Liens
ServicersServicers
The Hype: Fast, Certain & Simple
The Reality: Slow, Uncertain & Complex
HAFA Short Sale Approval!
HAFA Request
HAFA Problems
HAFA Problems
•The program is voluntary
All major servicers have agreed to participate but are
their hearts into it?
HAFA Problems•The program is voluntary
•The Servicers don’t understand their own HAFA program
The HAFA program could be different for each investor, lender or mortgage insurer
HAFA Problems•The program is voluntary
•The Servicers don’t understand their own HAFA program
•The payment incentives are not great enough for subordinate lien holders to give up their right to seek a deficiency judgment
Payments are relatively small for lien holder to satisfy entire debt
HAFA Problems•The program is voluntary
•The Servicers don’t understand their own HAFA program
•The payment incentives are not great enough for subordinate lien holders to give up their right to seek a deficiency judgment
•If the approved sales price or net proceeds is set too high, the property can’t be sold
Especially a problem in declining markets
New changes require values to be updated
HAFA Problems•The program is voluntary
•The Servicers don’t understand their own HAFA program
•The payment incentives are not great enough for subordinate lien holders to give up their right to seek a deficiency judgment
•If the approved sales price or net proceeds is set too high, the property can’t be sold
•Servicers, lenders, investors and insurers all have to buy into the program for it to work
Any one of them can say noHAFA does not apply to FHA and VA loans
HAFA Problems•The program is voluntary
•The Servicers don’t understand their own HAFA program
•The payment incentives are not great enough for subordinate lien holders to give up their right to seek a deficiency judgment
•If the approved sales price or net proceeds is set too high, the property can’t be sold
•Servicers, lenders, investors and insurers all have to buy into the program for it to work
•Rules and Requirements can be modified
Changes can gut the program
HAFA Track Record
U.S. HAFA Short Sales and DIL’sApril 2010 to June 2011
Source: Making Homes Affordable June Report
U.S.April 2010 to May 2011
Completed
Total HAFA Short Sales & DIL’s
21,412 10,754
BofA 2,824 1,873
JP Morgan Chase 7,722 3,596
Litton Loan Servicing 1,119 483
Select Portfolio 1,223 591
Wells Fargo 6,229 3,123
All Other Servicers 2,295 1,088
HAFA Track
Record
U.S. HAFA Short Sales and DIL’sApril 2010 to June 2011
Source: Making Homes Affordable June Report
U.S.April 2010 to May 2011
Completed
Total HAFA Short Sales & DIL’s
21,412 10,754
BofA 2,824 1,873
JP Morgan Chase 7,722 3,596
Litton Loan Servicing 1,119 483
Select Portfolio 1,223 591
Wells Fargo 6,229 3,123
All Other Servicers 2,295 1,088
HAFA Track
Record316 are
completed DIL’s
U.S. HAFA Short Sales and DIL’sApril 2010 to June 2011
Source: Making Homes Affordable June Report
U.S.April 2010 to May 2011
Completed
Total HAFA Short Sales & DIL’s
21,412 10,754
BofA 2,824 1,873
JP Morgan Chase 7,722 3,596
Litton Loan Servicing 1,119 483
Select Portfolio 1,223 591
Wells Fargo 6,229 3,123
All Other Servicers 2,295 1,088
HAFA Track
Record316 are
completed DIL’s
8,724 active files
U.S. HAFA Short Sales and DIL’sApril 2010 to June 2011
Source: Making Homes Affordable June Report
U.S.April 2010 to May 2011
Completed
Total HAFA Short Sales & DIL’s
21,412 10,754
BofA 2,824 1,873
JP Morgan Chase 7,722 3,596
Litton Loan Servicing 1,119 483
Select Portfolio 1,223 591
Wells Fargo 6,229 3,123
All Other Servicers 2,295 1,088
HAFA Track
Record316 are
completed DIL’s
8,724 active files
Compared to approximately
210,000 to 260,000 overall
short sales
General Overview of HAFA Guidelines and Forms:www.hmpadmin.com/portal/programs/foreclosure_alternatives.jsp
Making Home Affordable Handbook v3.3:www.hmpadmin.com/portal/programs/docs/hamp_servicer/mhahandbook_33.pdf
Supplemental Directive 10-18 (December 28, 2010):www.hmpadmin.com/portal/programs/docs/hamp_servicer/sd1109.pdf
Supplemental Directive 11-08 (August 9, 2011):www.hmpadmin.com/portal/programs/docs/hamp_servicer/sd1108.pdf
Supplemental Directive 11-09 (September 1, 2011):www.hmpadmin.com/portal/programs/docs/hamp_servicer/sd1109.pdf
NPV Online Calculator
https://checkmynpv.com/
HAFA Website Resources
Questions? More Information?
Stephen J. Nashnash@nash-law.comwww.nash-law.com
2175 Northdale Blvd. NW Coon Rapids, MN 55443
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