Hafa slideshow

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


incentives for borrowers and lenders to participate in the HAFA program

•RASS: Request for Approval of Short Sale

Definitions



•RASS: Request for Approval of Short Sale•Relocation Assistance: Incentive Payment to Borrower

Definitions



•RASS: Request for Approval of Short Sale•Relocation Assistance: Incentive Payment to Borrower•RMA: Request for Modification and Assistance

Definitions



•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



First lien Originated on or Before 1-1-09First LienFirst Lien


CondemnationCondemnationQualifying for HAFA



Delinquent or Reasonably Foreseeable Delinquency

First lien Originated on or Before 1-1-09

DelinquencyDelinquency

First LienFirst Lien


CondemnationCondemnation

Borrower qualifies if in foreclosure or in

bankuptcy

Qualifying for HAFA





Principal Balance Less Than $729,725Principal BalancePrincipal Balance





Includes arrearages

Qualifying for HAFA





Principal Balance Less Than $729,725

Financial Hardship

Principal BalancePrincipal Balance

Financial HardshipFinancial Hardship





Hardship demonstrated by Hardship Affidavit or RMA

Qualifying for HAFA

THE HAFA SHORT SALE AGREEMENT

PROCESS


PROCESS


PROCESS

Even if borrower

fails to respond

servicer can still consider

them for HAFA


PROCESS No longer need

to show monthly mortgage payment

exceeds 31% of monthly gross

income


PROCESS


PROCESS


PROCESS


PROCESS


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


3 days


3 days

45 days


Every 15 days

45 days

3 days


Every 15 days30 days

3 days

Was 45

days


Every 15 days

30 days

3 days



3 days

30 days Every 15 days


3 days

30 days

Every 15 days

Can be given while considering borrower

for HAFA


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


PaymentForbearance

PaymentForbearance

HAFA ExpensesHAFA Expenses



All lien holders must release lien and waive rights to seek deficiency


PaymentForbearance

PaymentForbearance

Release All LiensRelease All Liens




All lien holders must release lien and waive rights to seek deficiency


Mortgage InsuranceMortgage Insurance

Mortgage insurers have to agree to not seek payments from borrower

PaymentForbearance

PaymentForbearance

Release All LiensRelease All Liens


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



Lien holders must release liens and waive rights to seek deficiencies


PaymentsPayments


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



Lien holders must release liens and waive rights to seek deficiencies


Lien holders cannot charge expenses of HAFA short sale to borrower unless short sale fails

PaymentsPayments


Release LiensRelease Liens


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


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



The borrower is entitled to a $3,000.00 relocation assistance payment

Incentive Payments


BorrowersBorrowers

Subordinate Liens

Subordinate Liens

ServicersServicers

Borrower can use this to pay transaction costs but not for

payment to lien holders



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.


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



•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




•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





•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





•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




Completed


21,412 10,754

BofA 2,824 1,873






HAFA Track

Record316 are

completed DIL’s




Completed


21,412 10,754

BofA 2,824 1,873






HAFA Track

Record316 are

completed DIL’s

8,724 active files




Completed


21,412 10,754

BofA 2,824 1,873






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. [email protected]

2175 Northdale Blvd. NW Coon Rapids, MN 55443