This document provides information about the foreclosure process, homeowner options to avoid foreclosure like loan modifications and short sales, and the benefits and process of pursuing a short sale. It outlines the typical short sale timeline of 45-90 days and the documentation required for a short sale package. It also summarizes programs like HAMP and HAFA that provide guidelines and incentives for loan modifications and short sales. Special protections for active military members in foreclosure are mentioned as well.

1. Short Sales As Easy As A B C

2. Foreclosure ProcessCollections 1st 90 Days DelinquentPre-Foreclosure 90 days -12 months (short sale potential stage)Trustee Sale – Foreclosure AuctionREO Department – Until Liquidated

3. Time to respondForeclosing party must serve notice of sale on homeowner by mail or publication. Homeowner has 14 days to respond if service is by mail. If foreclosing party uses publication, generally notice must be published in a local newspaper of general circulation once a week for 4 consecutive weeks unless deed of trust provides for a different interval. Sale can be held eight to 30 days after last publication.

4. Foreclosure Statutes Va Code 55-59 to 55-66.6No reinstatement of loan before saleNo redemption after saleNo Special protections for foreclosures of high-cost mortgagesSpecial state protections for service membersDeficiency judgments may be obtained in a separate law suit after the sale (Changing April 5, 2010.New owner does not have to give former owner notice before filing eviction notice

5. Homeowner OptionsRefinanceLoan ModificationForbearance/Repayment PlanPartial ClaimBankruptcy

6. Short Sale Benefits to SellerAvoid Foreclosure on credit historyFannie Mae Guidelines for buying home after foreclosure is 5-7 yearsForeclosure with extenuating circumstances 3-7 yearsDeed in Lieu 4-7 yearsDeed in Lieu with extenuating circumstances 2-7 yearsShort Sale 2 years

7. Short Sale ProcessMarket & Obtain ContractAssemble Short Sale PackageSupport Short Sale Package with Supporting DocumentationFollow Up With Your Short Sale Coordinator

8. Short Sale Time LineCan take 45-90 days from the date offer is received.Day 1: Receive a legitimate offerDay 2-15 Order appraisalDay 15-25 AnalyzeDay 25-40 Negotiate Delegated Decisions.Day 40-75 Approval or DeclineDay 75-90 Final Decision Communication

9. HAMP(Home Affordable Modification Program)HAMP is a loan modification program designed to reduce delinquent and at-risk borrowers' monthly mortgage payments.HAMP is effective immediately for mortgages originated on or prior to January 1, 2009, and will expire on December 31, 2012. Servicers must solicit eligible borrowers who are 31 or more days delinquent for a modification under HAMP, but cannot solicit borrowers for this program who are current or less than 31 days delinquent.

10. HAFA (Home Affordable Foreclosure Alternatives)Complements HAMP eligible but nevertheless unable to keep their home.Uses borrower financial and hardship information already collected under HAMPAllows borrowers to receive pre-approved short sales terms before listing the property including the minimum acceptable net proceeds.Prohibits the servers from requiring a reduction in the real estate commission agreed upon in the listing agreement up to 6%Requires borrowers to be fully released from future liability for the first mortgage debt and if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note or deficiency judgment is allowed)Uses a standard process , uniform documents and time frames/deadlines.Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs and up to a $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders.Requires all service participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions and borrower motivation and cooperation.Does not take affect until April 5, 2010, but servicers may implement it before then and the program sunsets on Dec 31, 2010.

11. Who is eligible for HAFA?Borrower must meet the basic eligibility criteria for HAMPPrincipal residence

12. First lien originated before 2009

13. Mortgage delinquent or default is reasonably foreseeable

14. Unpaid principal balance no more than $729,750 (higher limits for two to four unit dwellings)

15. Borrowers total monthly payment exceeds 31% of gross income NotificationIf a servicer has not already discussed a short sale or DIL with the borrower, it must notify the borrower in writing of these options and give the borrower 14 calendar days to respond, orally or in writing. If the borrower does not respond, that ends the servicer’s duty to give a HAFA offer.Servicers must consider HAMP eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:Does not qualify for a HAMP trial period planDoes not successfully complete a HAMP trial period planIs delinquent on a HAMP modification (misses at leasttwo consecutive payments)Requests a short sale

16. Short Sale AgreementThe borrower has 14 calendar days from the date of the Short Sale Agreement to sign and return it to the servicer. The SSA must give the borrower an initial period of 120 days to sell the house with extensions permitted up to a total of 12 months.

17. Purchase OfferWithin three business days of receiving an executed purchase offer the borrower or agent) must submit a complete request for Approval of Short Sale. (RASS) to the servicer, including:Copy of the sales contract and all addendumsBuyer documentation of funds or pre-approval letterAll information on the status of subordinate liens and/or negotiations with subordinate lien holdersWithin 10 business days after the servicer receives the RASS and all required attachments, the servicer must approve or deny the request and advise the borrower.

18. ClosingThe servicer may require the closing to take place within a reasonable period after it approves the RASS, but not sooner than 45 days from the date of the sales contract unless the borrower agrees.The servicer must release its first mortgage lien within 10 business days after receipt of sales proceed from a short sale or delivery of the deed in the case of a DIL. Investor must waive rights to seek deficiency judgments and may not require a promissory note for any deficiency.

19. Document Check ListTwo months most recent pay stubsRetirement statementYearly/Quarterly SSISchedule C (self employed)Hardship LetterFinancial StatementMost Recent Mortgage StatementDemand Letters from Foreclosing Attorney/Mortgage CompanyAll Checking/Saving StatementsTax Return 2009 (or extension) 2008 & 2007

20. Short Sale PackageAuthorization to Release InformationPurchase ContractBuyer’s Pre-Approval LetterProposed HUD-1 or Net SheetHardship LetterFinancial StatementNeighbor In Need Affidavit of Ownership

21. Hardship LetterExplain the situation and WHYExplain what seller tried to do to maintainSeller needs to state they can no longer afford property

22. Service Members Civil Relief ActIf you or a family member is on active military duty, you have some extra protections, including the right to demand that a judge pass on the merits of the foreclosure EVEN if you are living in a state that does nonjudicial foreclosures.

23. Special Protections for Service Members on Active DutyIf you took the mortgage out prior to active duty:Judicial Foreclosure is REQUIREDDefault Judgments Can Be ReopenedInterest Rates Must Be Reduced

24. Chapter 13 Can Delay or Stop ForeclosureGives you time to make up your missed payments.Benefits start the minute you filewww.nolo.com explains bankruptcy & optionsNo Lender Reinstatement FeesTrustee Fee 10%Ask the court to decide whether the facts upon which a proposed foreclosure is based in erroneous.Turn a Second or Third Mortgage into an Unsecured Debt.