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February 2012 | Making Home Affordable
Home Affordable Foreclosure AlternativesTraining for Trusted Advisors
2February 2012 | Making Home Affordable
Home Affordable Foreclosure Alternatives – HAFAThis presentation will cover the following:
1 Overview
2 Advantages
3 Components and Process Phases
5 Success Stories
4 Resources
6 Discussion/Questions
3February 2012 | Making Home Affordable
Home Affordable Foreclosure Alternatives – HAFAOverview
4February 2012 | Making Home Affordable
HAFA Advantages HAFA has key benefits for the homeowner.
Releases homeowner from future liability of mortgage debt
Homeowner receives $3,000 in relocation assistance
Less negative effect on homeowner’s credit score
Homeowner incurs no out‐of‐pocket expenses
Foreclosure cannot take place while the homeowner is being considered for HAFA
Servicer will assign a “relationship manager” to work with the homeowner
5February 2012 | Making Home Affordable
Provide assistance to homeowners who need to transition to more affordable housing.
Release of subordinate liens and personal liability
Financial incentives for homeowners, investors and servicers
Key Components of the Program
What are the Goals of HAFA?
Goal 1Provide assistance to homeowners who need to transition to more affordable housing.
Release of subordinate liens and personal liability.
Financial incentives for homeowners, investors and servicers.
Goal 2 Standardize & streamline the short sale process.
Uniform documents.
Specified response times and timeframes.
Upfront disclosure of short sale terms and conditions.
Key Components of the Program
6February 2012 | Making Home Affordable
A foreclosure sale is conducted.
The servicer refers the loan to foreclosure.
Protections Against Unnecessary ForeclosureEligible homeowners must be considered for HAFA before:
Note:
• At the servicer’s discretion, the servicer may initiate foreclosure or continue with an existing foreclosure, but may not complete the sale.
• A foreclosure sale may not be conducted until 5 business days after sending a notice stating that the homeowner was determined to be not eligible for HAFA.
1
2
7February 2012 | Making Home Affordable
Mortgage First lien mortgage balance equal to or less than $729,750 (1‐unit).
Mortgage originated on or before January 1, 2009.
Homeowner
Has not purchased a new property within the last 12 months.
Has documented financial hardship (for Servicemembers, this may include a Permanent Change of Station order).
Is delinquent or default is reasonably foreseeable.
Property One‐to‐four unit owner‐occupied.
Primary residence at some point in the last 12 months.
HAFA Eligibility Criteria
8February 2012 | Making Home Affordable
HAFA Documents Summary
SSA Short Sale Agreement
RASSRequest for Approval of Short Sale
Alternative RASSAlternative Request for Approval of Short Sale
DIL AgreementDeed-in-Lieu Agreement
9February 2012 | Making Home Affordable
From HAMP
Homeowner does not qualify for a Trial Period Plan.
Homeowner does not successfully complete a Trial Period Plan.
Homeowner misses at least two consecutive payments on a permanent HAMP modification.
Homeowner requests Short Sale or Deed‐in‐Lieu.
From HAMP
Homeowner does not qualify for a Trial Period Plan (TPP).
Homeowner does not successfully complete a TPP.
Homeowner misses at least two consecutive payments on a permanent HAMP modification.
Homeowner requests short sale or DIL.
HAFA Entry PointsA homeowner can enter HAFA in several ways:
Without first being in HAMP
Homeowner requests short sale or DIL.
Property already listed
Homeowner sends an executed sales contract to the servicer.
Without first being in HAMP
Homeowner requests short sale or DIL.
Property already listed
Homeowner sends an executed sales contract to the servicer.
10February 2012 | Making Home Affordable
11February 2012 | Making Home Affordable
HAFA Screening Phase
Servicer acknowledges homeowner’s request
10 Days
Homeowner request short sale or DIL
Servicer screen homeowner and notify for HAFA
30 DaysHomeowner responds to notification
14 Days
Servicer acknowledges homeowner’s request
10 Days
12February 2012 | Making Home Affordable
HAFA Screening Phase Bankruptcy Consideration
1 Homeowner in bankruptcy must be considered for HAFA if requested.
2 Servicers are not required to proactively solicit homeowners in bankruptcy.
3 Time allowances are acceptable for bankruptcy‐related delays.
Screen homeowner and notify for HAFA
30 Days
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45 Days
Homeowner evaluation / SSA preparation
14 Days
Homeowner signs and returns SSA
HAFA Evaluation Phase
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HAFA Evaluation PhaseRequired Homeowner Documentation
45 Days
Servicer evaluation / SSA preparation
1 RMA or Hardship Affidavit
2 Dodd‐Frank Certification
3Servicer may, but is not required to obtain financial documents
15February 2012 | Making Home Affordable
45+ Days
Close transaction
45+ Days
Close transaction
HAFA Marketing Phase
120+ Days
List property
10 Days
Respond to offer
3 Days
Receive offer
120+ Days
List property
10 Days
Respond to offer
3 Days
Receive offer
16February 2012 | Making Home Affordable
Working Together for Success
Agent Responsibilities
Listing agent should check market value of property regularly to monitor fluctuations.
Listing agent should monitor and respond to all homeowner and/or servicer inquiries to ensure timely two‐way communication between parties.
Listing agent will work with homeowner to engage the subordinate lien holders in efforts to obtain lien under $6,000 subordinate lien cap (mortgage and non‐mortgage debt).
Homeowner Responsibilities
Provide all information and sign documents required within required timeframes.
Respond to all servicer inquiries. Cooperate with the listing broker to actively
market the property. Maintain the property in a manner that
facilitates marketability, including: Interior and exterior maintenance, Payment of utilities,
association/condo dues, fire and hazard insurance, and
Report property damage requiring an insurance claim to repair.
Work to clear any liens or other title impediments that would prevent conveyance.
Make the monthly payment stipulated in the SSA, if applicable.
17February 2012 | Making Home Affordable
HAFA Marketing PhaseProperty Valuation & Disputes
Re‐evaluation Procedures
Periodically re‐evaluate property value. Reconcile discrepancies between independent assessment and market value.
Value Determination
Servicer determines property value in accordance with investor guidelines during the evaluation phase.
Value is communicated in the SSA as the list price.
Homeowner Disputes
Homeowner can dispute property value. Procedures by which a dispute can be made must be listed on each servicer’s HAFA Matrix.
3 Days
Receive offer
Re‐evaluation Procedures
Periodically re‐evaluate property value. Reconcile discrepancies between independent assessment and market value.
18February 2012 | Making Home Affordable
1 A copy of the executed sales contract and all addenda.
2 Buyer’s documentation of funds or buyer’s pre‐approval or commitment letter.
3 All information regarding the status of subordinate liens and/ornegotiations with subordinate lien holders.
Within 3 business days of receipt of an executed sales contract, the homeowner or the listing agent sends the a completed RASS with supporting documents to the servicer.
Supporting documents include the following:
HAFA Marketing PhaseSubmitting Offer to Servicer
3 Days
Receive offer
19February 2012 | Making Home Affordable
HAFA Marketing PhaseApproval or Denial of the Offer
Within 10 business days of receipt of the RASS, the servicer must determine whether to approve the short sale and provide a decision back to the homeowner.
1If the net proceeds available for payment to the servicer are equal to or exceed the pre‐determined minimum acceptable net proceeds amount and all other program conditions are met, the servicer must approve the short sale.
2The servicer may require that the sale closing take place within a reasonable period following acceptance of the RASS (but no less than 45 calendar days from the date of the sales contract without the homeowner’s consent).
3 Decision is documented in the servicer section of the RASS and sent back to the homeowner.
4 Servicer may not require any reduction to the real estate commission amounts.
10 Days
Respond to offer
20February 2012 | Making Home Affordable
HAFA Marketing PhaseClosing the transaction
The RASS should identify
key costs expected at
closing.
Term of Sale Section of the RASS
3 Days
Receive offer
21February 2012 | Making Home Affordable
Homeowner and/or listing agent has 3 business days to submit offer with RASS to servicer
HAFA Process Summary Timeline
45+ Days10 Days3 Days120+ Days14 Days45 Days
Evaluation Phase Marketing Phase
Servicer has 30 calendar days to offer consideration under HAFA
Servicer has 45 calendar days to deliver an SSA to homeowner
Homeowner has 14 calendar days to respond with request for consideration for HAFA
Homeowner has 14 calendar days to return SSA to servicer
Homeowner and/or listing agent has minimum of 120 calendar days to market property
Servicer has 10 business days to approve or deny the sale or provide a counter offer
Servicer schedules closing for no less than 45 calendar days. Upon closing, homeowner receives $3,000 relocation assistance
10 Days14 Days30 Days
Screening Phase
Servicer has 10 business days to acknowledge homeowner’s request
Trigger event to begin HAFA screening
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Alternative Request for Short Sale ‐ RASS Process
Homeowner and/or listing agent submits Alternative RASS with executed contract and RMA.
Servicer notifies homeowner about potential HAMP eligibility.
Homeowner has 14 calendar days to respond to request for HAMP consideration.
Servicer schedules closing for no less than 45 calendar days. Upon closing, homeowner receives $3,000 relocation assistance.
Servicer has 45 calendar days to approve, deny or provide counter offer.
14 Days 45+ Days
Approval / ClosingEligibility / Evaluation
Servicer has 10 business days to acknowledge homeowner’s request.
Listing / Marketing
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Deed‐In‐Lieu of ForeclosureTerms
1 Homeowner conveys clear title to servicer or investor.
2 Homeowner negotiates subordinate liens.
3 DIL Agreement may provide option for homeowner to rent property.
4 DIL Agreement may allow homeowner to re‐purchase property at a later time – must be included in servicer HAFA Policy.
24February 2012 | Making Home Affordable
HAFA Resources
25February 2012 | Making Home Affordable
Trusted Advisors Escalate Tough Cases
HAMP Solution Center (HSC) helps trusted advisors with cases that are difficult to resolve.
HSC will be sending a periodic survey to trusted advisors to rate the quality of service received. This information is highly valuable to HSC in its efforts to ensure continuous improvement in the escalations process, and it is integral that we receive feedback from you
through this survey.
26February 2012 | Making Home Affordable
Requesting an Escalated Case
Trusted advisor or homeowner escalates a case for review and resolution
MHA Third Party Authorization Form
Case Submission Form
27February 2012 | Making Home Affordable
MakingHomeAffordable.gov
28February 2012 | Making Home Affordable
Florida
HAFA – Success StoriesA smooth transaction helps a Florida family move forward
From Vicki O. of Prudential Florida Realty:
“We feel relieved!”
When Vicki’s client did not initially qualify for a HAMP modification, the servicer recommended HAFA. The servicer was responsive and worked toward a quick turnaround – five weeks to approval from the time Vicki found a buyer. Vickistated that the HAFA transaction was “one of the smoothest transactions she ever had”.
The seller owed approximately $150,000 on the mortgage with a final sales price of $39,500. The HAFA short sale closed with no deficiency judgment for the seller and left this Florida family saying, “We feel relieved!”.
With a new “lease” on life, the client used part of the $3,000 relocation incentive to pay for the security deposit and first month’s rent on their new rental home.
29February 2012 | Making Home Affordable
California
HAFA – Success StoriesMany “THANKS” from a couple in California
Client: Craig & Nancy L.Agency: Marjorie S. and Harald S. of Stangl Advisors – San Francisco, CA
“…THANKS just doesn’t seem adequate for all your efforts on our behalf…”
A pending divorce and loss of income established the hardship for Craig and Nancy L. of California. The property was listed for $450,000 and the couple owed $650,000 on the first lien and $206,201.13 on the second lien. Unfortunately, their first experience was marred by a real estate professional who mismanaged the entire process. After having the property listed for 18 months to no avail, foreclosure was just around the corner.
Craig and Nancy were then referred to Stangl Advisors. Marjorie and Harald at Stangl introduced their new clients, Craig and Nancy, to HAFA and they were happy to learn that such a program existed. After only seven months, Craig and Nancy closed escrow at an approved sales price of $475,000 and were able to make a healthy transition without the burden of a deficiency judgment! In a letter to Marjorie and Harald, they wrote, “…THANKS just doesn’t seem adequate for all your efforts on our behalf…”.
30February 2012 | Making Home Affordable
Arizona
HAFA – Success StoriesCommunications is the basis for our success
Agency: Coldwell Banker Residential Brokerage
A key to success is to provide clear, concise communication to all parties throughout the process: sellers, buyers & servicers.
“At Coldwell Bankers, we developed a short sale Q&A for sellers to ensure they understand the HAFA program, as well as complete a financial worksheet and provide a 10-step worksheet with action items and timelines. We engage with the servicer and establish a strong working relationship, building confidence and trust, while adhering to consistent dialogues, maintain communication logs, and follow up. We see ourselves as the conduit of the process, communication, setting expectations, and follow through!”
Success: “I completed 3 short sales in the first 6 months of 2011 and have 4 in process!”
31February 2012 | Making Home Affordable
Discussion/Questions
Thank You
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