This new federal policy (Supplemental Directive 09-09)takes affect April 5th, 2010, but many are adopting these guidelines earlier.How about pre-approved short sales and 10 response to offers? I wanted to bring to your attention some important details about the recently announced Home Affordable Foreclosure Alternatives program (HAFA), which provides instructions for lenders and servicers participating in the Making Home Affordable Program and Home Affordable Modification Program (HAMP).
The HAFA program will permit PRE-APPROVED SHORT SALE TERMS before a property is listed; prevent servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval; RELEASE borrowers from FUTURE liability for the DEBT; and provide financial incentives to borrowers, servicers, and investors.
Under terms of the program, the borrower and/or listing broker have three business days to submit an executed purchase offer and related documents to the servicer on a short sale, and the SERVICER HAS 10 BUSINESS DAYS TO RESPOND to an executed purchase OFFER. The servicer may negotiate the real estate commission prior to the listing of the property, not to exceed 6 percent, but once this has been agreed to the commission may not be reduced at a later date.
The servicer also will determine the minimum net proceeds for a short sale; if an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it.
Each participating servicer also must develop a written policy that describes the basis on which the servicer will offer the HAFA program to borrowers. All borrowers must be evaluated for a loan modification prior to going to HAFA. For additional information, please go to https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf
You will need to follow certain procedures to achieve these pre-aprovals and also use NEW FORMS.
Some other cool changes:
The HAFA program simplifies and streamlines the use of short sale and DIL options by incorporating the following unique features:
- Compliments HAMP by providing viable alternatives for borrowers who are HAMP eligible.
- 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.
- Provides financial incentives to borrowers, servicers, and investors. This includes $1,500 for relocation for the borrower, $1,000 for the servicer to cover costs and a one-for-three matching basis to help investors payoff subordinate liens (up to $1,000)
- Allows the seller/lender to pay for a pest report
- Bars finalizing a foreclosure during the 120 day listing period.
- Applies for borrowers that did not qualify for a loan mod or failed the trial payment plan
- Sets forth consistent language to be reported to Credit Bureaus
FYI Fannie Mae & Feddie Mac will be coming out with their own version of protocols.
It's about time. (and money)
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