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Hafa slideshow
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Hafa slideshow

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HAFA is a government sponsored short sale and deed-in-liue program. It is an extension of the HAMP loan modification program. This slide show takes you through the HAFA process.

HAFA is a government sponsored short sale and deed-in-liue program. It is an extension of the HAMP loan modification program. This slide show takes you through the HAFA process.

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  • 1. HAFA: Sounds Simple But the Devil is in the Details
  • 2. HAFA Highlights
  • 3.
    • Ten day approvals
    HAFA Highlights
  • 4. HAFA Highlights
    • Ten day approvals
    • Satisfaction of all borrower debts
  • 5.
    • Ten day approvals
    • Satisfaction of all borrower debts
    • Consistent process and forms between servicers
    HAFA Highlights
  • 6. HAFA Definitions
  • 7.
    • DIL: Deed-in-Lieu
    Definitions
  • 8.
    • DIL: Deed-in-Lieu
    • HAFA: Homes Affordable Foreclosure Assistance
    Definitions
  • 9.
    • 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
  • 10.
    • 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
  • 11.
    • 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
  • 12.
    • 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
  • 13.
    • 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
  • 14.
    • 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
  • 15. General Terms and Conditions
  • 16. General Terms and Conditions Cannot Complete Foreclosure
  • 17. General Terms and Conditions Can Require Payments
  • 18. General Terms and Conditions Must Waive Deficiency Rights
  • 19. General Terms and Conditions Servicer, Investor, Lien Holders & Borrowers
  • 20. General Terms and Conditions Prior to Sale Servicer Must Determine Acceptable Minimum Net Proceeds
  • 21. 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
  • 22. Servicers must post their eligibility matrix on their website by October 15, 2011 Qualifying for HAFA
  • 23.
    • Borrowers Principal Residence
    Release 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
  • 24.
    • Borrowers Principal Residence
    • Property Cannot be Not Condemned
    Borrowers Property Condemnation Qualifying for HAFA
  • 25.
    • Borrowers Principal Residence
    • Property Cannot be Not Condemned
    First lien Originated on or Before 1-1-09 First Lien Borrowers Property Condemnation Qualifying for HAFA
  • 26.
    • Borrowers Principal Residence
    • Property Cannot be Not Condemned
    • Delinquent or Reasonably Foreseeable Delinquency
    First lien Originated on or Before 1-1-09 Delinquency First Lien Borrowers Property Condemnation Borrower qualifies if in foreclosure or in bankuptcy Qualifying for HAFA
  • 27.
    • 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 Principal Balance Delinquency First Lien Borrowers Property Condemnation Includes arrearages Qualifying for HAFA
  • 28.
    • 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 Balance Financial Hardship Delinquency First Lien Borrowers Property Condemnation Hardship demonstrated by Hardship Affidavit or RMA Qualifying for HAFA
  • 29. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 30. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 31. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 32. Even if borrower fails to respond servicer can still consider them for HAFA No longer need to show monthly mortgage payment exceeds 31% of monthly gross income THE HAFA SHORT SALE AGREEMENT PROCESS
  • 33. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 34. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 35. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 36. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 37. THE HAFA SHORT SALE AGREEMENT PROCESS
  • 38. THE HAFA SHORT SALE AGREEMENT (SSA)
  • 39. THE HAFA SHORT SALE AGREEMENT (SSA) General Terms
  • 40. Borrower must authorize servicer to share personal financial info necessary to complete the short sale (including to US Treasury Department)
  • 41. Buyer cannot sell within 90 days of closing Notice that sale must be arm’s length transaction
  • 42. Monthly payment, if any – can’t exceed 31% of gross monthly income
  • 43. Lender agrees to not complete foreclosure while there is a valid SSA
  • 44. Borrower agrees to provide info and sign documents to verify program eligibility
  • 45. Maintain interior/exterior for marketability
  • 46. Work to clear any title issues
  • 47. Cancelation or contingency clauses for PA
  • 48. THE HAFA SHORT SALE AGREEMENT (SSA) Key Marketing Terms
  • 49. Must be listed with licensed real estate agent Commission cannot exceed 6%
  • 50. Borrower must cooperate with listing broker and respond to servicer inquiries
  • 51. Either list price approved by servicer or expressed as net price On or before 10-15-11 each servicer must have plan to periodically re-evaluate property value
  • 52. THE HAFA SHORT SALE AGREEMENT (SSA) Closing and Other Expenses
  • 53. Reasonable and customary for community where property is located Servicer must describe the costs that can be deducted
  • 54. Real estate commission to be paid, not to exceed 6%
  • 55. Notice if servicer hires contractor to assist broker
  • 56. THE HAFA SHORT SALE AGREEMENT (SSA) Duration of SSA
  • 57. A fixed term not less than 120 calendar days from effective date
  • 58. Up to 12 months
  • 59. Set out terms under which SSA can be terminated
  • 60. THE HAFA SHORT SALE AGREEMENT (SSA) Borrower Financial Liabilities/Incentives
  • 61.  
  • 62. Servicer will allow a portion of proceeds to subsequent lien holders in exchange for full satisfaction of the debt
  • 63. $3,000 relocation incentive to borrower
  • 64. THE HAFA SHORT SALE AGREEMENT (SSA) Notice
  • 65. Notice that short sale may have income tax consequencies
  • 66. Notice that short sale may have a negative impact on credit score
  • 67.  
  • 68. THE HAFA SHORT SALE AGREEMENT (SSA) Early Termination
  • 69.  
  • 70.  
  • 71. Borrower qualifies for modification Borrower bring account current Borrowers financial situation improves significantly
  • 72.  
  • 73.  
  • 74.  
  • 75.  
  • 76. Post SSA Purchase Agreement
  • 77. Post SSA Purchase Agreement
  • 78. 3 days Post SSA Purchase Agreement
  • 79. 3 days 10 days Post SSA Purchase Agreement
  • 80. Pre-SSA Purchase Agreement
  • 81. Pre-SSA Purchase Agreement
  • 82. 3 days Pre-SSA Purchase Agreement
  • 83. 3 days 45 days Pre-SSA Purchase Agreement
  • 84. Every 15 days 45 days 3 days Pre-SSA Purchase Agreement
  • 85. Every 15 days 30 days 3 days Was 45 days Pre-SSA Purchase Agreement
  • 86. Every 15 days 30 days 3 days Pre-SSA Purchase Agreement
  • 87. Pre-SSA Purchase Agreement
  • 88. 3 days 30 days Every 15 days Pre-SSA Purchase Agreement
  • 89. 3 days 30 days Every 15 days Can be given while considering borrower for HAFA Pre-SSA Purchase Agreement
  • 90. First Lien Holder Requirements
  • 91.
    • Must have written policy with respect to requiring monthly payments
    First Lien Holder Requirements Payment Forbearance
  • 92.
    • 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 Payment Forbearance HAFA Expenses
  • 93.
    • 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 Payment Forbearance Release All Liens HAFA Expenses
  • 94.
    • 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 Insurance Mortgage insurers have to agree to not seek payments from borrower Payment Forbearance Release All Liens HAFA Expenses
  • 95. Subsequent Lien Holder Requirements
  • 96.
    • Cannot Require Payment From Borrower or Real Estate Agent
    Subsequent Lien Holder Requirements Payments Cannot require borrower or real estate agent to make payment in exchange for satisfying debt
  • 97.
    • Cannot Require Payment From Borrower or Real Estate Agent
    • All payments to Lenders must be shown on HUD statement
    Subsequent Lien Holder Requirements Payments HUD Statement No payments outside closing allowed
  • 98.
    • 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 Payments HUD Statement Release 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
  • 99.
    • 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 Payments HUD Statement Release Liens HAFA Expenses If short sale fails, they can add expenses to the balance owed
  • 100. Incentive Payments
  • 101.
    • 1,500.00 for a successfully closed HAFA short sale or DIL
    Incentive Payments Servicers
  • 102.
    • 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 Servicers 6% cap to individual lien holder no longer applies $6,000 cap does not apply to non-mortgage liens
  • 103.
    • 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 Borrowers Subordinate Liens Servicers Borrower can use this to pay transaction costs but not for payment to lien holders
  • 104.
    • 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 Investors Investor 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 Borrowers Subordinate Liens Servicers
  • 105. The Hype: Fast, Certain & Simple The Reality: Slow, Uncertain & Complex HAFA Short Sale Approval! HAFA Request
  • 106. HAFA Problems
  • 107. HAFA Problems
    • The program is voluntary
    All major servicers have agreed to participate but are their hearts into it?
  • 108. 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
  • 109. 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
  • 110. 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
  • 111. 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 no HAFA does not apply to FHA and VA loans
  • 112. 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
  • 113. HAFA Track Record
  • 114. U.S. HAFA Short Sales and DIL’s April 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
  • 115. U.S. HAFA Short Sales and DIL’s April 2010 to June 2011 Source: Making Homes Affordable June Report 316 are completed DIL’s 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
  • 116. U.S. HAFA Short Sales and DIL’s April 2010 to June 2011 Source: Making Homes Affordable June Report 316 are completed DIL’s 8,724 active files 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
  • 117. U.S. HAFA Short Sales and DIL’s April 2010 to June 2011 Source: Making Homes Affordable June Report 316 are completed DIL’s 8,724 active files Compared to approximately 210,000 to 260,000 overall short sales 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
  • 118.
    • 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
  • 119. Questions? More Information?
    • Stephen J. Nash
    • [email_address]
    • www.nash-law.com
    • 2175 Northdale Blvd. NW
    • Coon Rapids, MN 55443

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