Home Affordable Foreclosure Alternatives Training for Trusted Advisors

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


Home Affordable Foreclosure Alternatives – HAFAOverview


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


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


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


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


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


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


Property already listed

Homeowner sends an executed sales contract to the servicer.

Without first being in HAMP


Property already listed

Homeowner sends an executed sales contract to the servicer.



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


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


45 Days

Homeowner evaluation / SSA preparation

14 Days

Homeowner signs and returns SSA

HAFA Evaluation Phase


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


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


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.


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.


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


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


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


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


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


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.


HAFA Resources


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.


Requesting an Escalated Case

Trusted advisor or homeowner escalates a case for review and resolution

MHA Third Party Authorization Form

Case Submission Form


MakingHomeAffordable.gov


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.


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…”.


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!”


Discussion/Questions

Thank You

Real Estate

Home Affordable Foreclosure Alternatives Training for Trusted Advisors