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HAFA Overhaul 2013 – Reduced Number of Forms

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

New forms

  • 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.

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Major Changes Announced for HAFA

Major news in the short sale and housing industry! On Friday, March 9, the Obama Administration announced updates to the Home Affordable Foreclosure Alternative (HAFA) program. Created in 2009, HAFA is a government-sponsored initiative assisting all Home Affordable Modification Program (HAMP) eligible homeowners in avoiding foreclosure through short sales and deed-in-lieus.

The HAFA updates will go into effect on June 1, 2012, and will allow more distressed homeowners to seek assistance. Most importantly, the deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012, to December 31, 2013.

Other major changes from March’s updates to the HAFA program include:

  • The removal of occupancy requirements. Previously, HAFA required homeowners to have lived in the property within the last 12 months.
  • $3,000 relocation incentives will be limited to properties occupied by an owner or tenant at the time of the short sale.
  • Mortgage payments will be allowed to exceed 31% of the homeowner’s gross monthly income. This update will allow a homeowner to stay current on her mortgage and still qualify, minimizing the overall impact to her credit.
  • Secondary lienholders may receive up to a maximum of $8,500, up from $6,000 previously.
  • And one of the most dramatic changes: The Credit Bureau Reporting will be Account Status Code 13 (paid or closed account/zero balance) or 65 (account paid in full/a foreclosure was started), as applicable.

With these updates, a homeowner can be current on their mortgage, qualify for HAFA, continue to make their payments, and execute a short sale with minimum impact on their credit!

 
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Posted by on March 15, 2012 in Uncategorized

 

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Assessed value of Colorado property declines

According to the Denver Post http://www.denverpost.com/legislature/ci_16908034?source=rss
assessed value of Colorado Properties declined in 2010 for the first time since real estate troubles in the 1980’s, and residential properties are expected to plummet another 10.4% in 2011. In the 80’s the oil bust and the savings-and-loan collapse were blamed for the decline in real estate values. As we enter the second decade in the 21st century, the culprits are “The sustained high level of foreclosures, economic downturn and tight mortgage financing market have put downward pressure on home prices throughout Colorado” the Report said. As we work our way through the difficulties associated with high unemployment, lethargic economy, and declines in real estate values, more and more families are finding themselves in trouble on their mortgages. Many distressed homeowners find that they are not able to make the mortgage payment which they once qualified for, either because of job loss, curtailment of income, high debt, or medical issues. To boot, their property is no longer worth as much as they owe, making it difficult to even sell just to get out from under it. In some of these situations, depending on their particular scenario, the homeowner may be able to qualify for a loan modification we all continue to hear so much about. Unfortunately, according to most of the professionals who are attempting to help people obtain a modification or workout program so they can stay in their home, it is a very small percentage of borrowers who are getting the permanent solution they are looking for approved by their lenders. For the rest, a Short Sale is a much better alternative to at least avoid Foreclosure and the aftermath of life after Foreclosure. That is where we come in. As a Certified Distressed Property Expert, my first consultation with a Distressed Homeowner is designed to help them determine if their situation may qualify them for a loan modification or one of the other alternatives to stay in their home. If we agree they should try to keep their home, I have experienced professionals who will give them the best possibility of keeping their home, by assisting the homeowner in compiling all of the critical information and documentation necessary, as well as negotiating on their behalf with the lender(s). In the event that they are not able to keep the property, my team and I have a proven system and track record to successfully sell the property for what it is worth in today’s real estate market, and negotiate the short pay with their lender. A Short Pay involves the mortgage lender(s) on the property agreeing to accept less than the full principal balance of the loan, the net proceeds from the Short sale, and release the lien on the property so it can be sold to avoid foreclosure.

Read more: Assessed value of Colorado property declines – The Denver Posthttp://www.denverpost.com/legislature/ci_16908034?source=rss#ixzz199DACYoA
Read The Denver Post’s Terms of Use of its content: http://www.denverpost.com/termsofuse

 
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Posted by on December 26, 2010 in Short Sales

 

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Short Sales may become an even better alternative on April 5th

There has been a great deal of variety and unknowns in the Short Sale process as each Servicer, Investor, Mortgage Insurance company, etc. involved in the process has a different way of processing, reviewing, and approving the transaction. The timeframes and results vary from one transaction to the next,  many times even with the same lender or Servicing company.

On April 5, 2010 a new program takes effect under the Home Affordable Modification Program (HAMP), the Home Affordable Foreclosure Alternatives program (HAFA). The intent is to provide incentives to the parties involved in the process to more effectively and efficiently implement options to avoid Foreclosure,  such as Short Sales. One of the intended effects is to bring uniformity to the process so there are less unknowns, hence a more attractive option to be considered by Homeowners in Distress, Buyers, and Realtors. If they meet their objectives, the process which has taken weeks or months in the past will be accomplished within 10 days.

So what are the rules? The rules are set by the new Home Affordable Foreclosure Alternatives (HAFA) Program, which seeks to find alternatives when a borrower cannot qualify for a modification under HAMP rules, because they don’t have enough income. Both short sales and deed-in-lieu of foreclosure will be options. In a deed-in-lieu of foreclosure the homeowner turns the keys over to the bank without the need for a foreclosure and the bank agrees to accept them without seeking any funds for a short fall when the home finally sells.

If a borrower is not eligible for a HAMP modification, then the bank will use the information gathered during the HAMP process so they don’t need to do additional eligibility analysis. The borrower will get a pre-approved set of terms for the short sale before the property is listed, which means the potential buyers won’t have to wait weeks or months for an answer from the bank. The bank is also required to fully release the borrower from any future liability for the debt.

For short sale offers where there isn’t a pre-approved set of terms, banks must respond to an offer in 10 days. However, I have not been able to find anyone who is sure when that 10-day count begins. Is it when the contract is offered or when all paperwork required by the bank has been submitted? We suspect banks will find ways to stall their answers. “It’s a cumbersome process. It will take a couple of months at least, to see what the lenders will actually do with this program.
To be eligible for help under HAFA rules:

  • The property must be the borrower’s principal residence;
  • The mortgage loan must be a first lien mortgage originated on or before January 1, 2009;
  • The mortgage is delinquent or default is reasonably foreseeable;
  • The current unpaid principal balance is equal to or less than $729,7501; and
  • The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income.

 

The HAFA program simplifies and streamlines the use of

short sales and DIL options by incorporating the following unique features:

 Complements HAMP by providing viable alternatives for borrowers who are HAMPeligible.

 Utilizes borrower financial and hardship information collected in conjunction with

HAMP, eliminating the need for additional eligibility analysis.

 Allows the borrower to receive pre-approved short sale terms prior to the property listing.

 Prohibits the servicer from requiring, as a condition of approving the short sale, a

reduction in the real estate commission agreed upon in the listing agreement.

 Requires that borrowers be fully released from future liability for the debt.

 Uses standard processes, documents and timeframes.

 Provides financial incentives to borrowers, servicers and investors.

If you are in the middle of the HAMP process or have been told you don’t qualify, be sure to ask about HAFA alternatives for help in getting out of your loan obligations.

 
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Posted by on April 4, 2010 in Short Sales

 

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Short Sales Guideline issued by Treasury Department

 
The National Association of Realtors provided the following abreviated analysis of the recent update for the Making home Affordable HAMP & associated HAFA Programs.
 
These guidelines will not be mandatory until April, but this gives us a good idea of the direction the government is going with the Short Sale process offering incentives to make this option more attractive to all parties. Obviously they prefer to have Short Sales rather than bank and HUD owned foreclosures.
 
On November 30, 2009 the Treasury department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of the Home Affordable Modification Program (HAMP). HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which will issue their own versions of HAFA in coming weeks. HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure.

HAFA:

Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

Uses standard processes, documents, and timeframes/deadlines.

Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements.

The program sunsets on December 31, 2012.

Press Release, HAMP Update-New Program Offers Borrowers Foreclosure Alternatives https://www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf

Supplemental Directive 09-09, Introduction of Home Affordable Foreclosure Alternatives-Short Sale and Deed-in-Lieu of Foreclosure https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf
 
 
 
 

 

 

 
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Posted by on December 3, 2009 in Short Sales

 

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