The US Treasury Department’s original purpose initiating the HAFA (Home Affordable Foreclosure Alternative) Program was to develop guidelines for a single Short Sale Program for lenders, investors, and their servicers to use in assisting Borrowers with a Hardship to Avoid Foreclosure. One of the objectives was to provide a template for a True Preapproved Short Sale. The idea was to reduce the time for a new offer on a Short Sale listed property to be approved, thus reducing the likelihood of having the Buyers get tired of waiting on the approval process and walking from the transaction prior to Short Sale approval.
Prior to HAFA the average time for Short Sale Approval among lenders was 14 months. Now, after the implementation of HAFA the average time for approval is 4 months. Once these new changes are implemented on Feb. 1, 2013, the time for the Short Sale Approval process should improve even more.
One element of the HAFA overhaul is a reduced number of forms:
Old Forms (Before Feb 1, 2013)
- SSA – Short Sale Agreement
- RASS – Request for Approval of Short Sale
- Alt. RASS – Alternative Request for Approval of Short Sale
- DIL – Deed-in-Lieu Agreement
- SSN-Short Sale Notice
- ARSS-Acknowledgement for Request of Short Sale
*Find these forms at www.hmpadmin.com/
NOTE: Until Feb 1, 2013 use old forms
For example, the new Short Sale Notice form no longer requires the Borrower to sign and return the acknowledgement form before the process can move forward. They estimate this one change will save 2 or 3 weeks in the process. The old process required a notice explaining the terms of the Short Sale program to be sent to the Borrower. After review the borrower had to sign acknowledging they received the information and agreeing to the terms. Then it had to be delivered to the servicer. The document needed to be uploaded by the servicer and then however long it takes for someone to get around to reviewing the signed document. All this before the next step in the process could be done. Under the new revised guidelines, the borrower can sign the acknowledgement at closing eliminating 2 – 3 weeks for the previous process.
More examples of revisions designed to reduce Short Sale Approval times will be discussed in future Posts. Post 3 of 5 on this subject.