Section Four - Evaluation
This section has a few twists. Deadly deadlines! Once the servicer determines the borrower is eligible for HAFA (based on its own written policy) there are 6 steps the servicers must follow to determine if a SS or DIL will be extended. I want to find out if the policies written by each servicer are open documents. Can we get copies?
1. Borrower Solicitation and Response. If the servicer has not already discussed a SS or DIL, the Servicer MUST proactively notify the borrower in writing of the availability of these options. Now here is the kicker - the borrower has 14 calendar days from the date of notification (the date of the letter) to contact the servicer and request consideration. The communication can be verbal or written. If the borrower does not contact the server within the timeframe- the server has no further obligation to extend a HAFA offer. In other words - they can go straight from here to foreclosure. Also warn your clients to watch what they say.... If at any time the borrower indicates that he or she is not interested in these options - the server has no further obligation to extend a HAFA offer.
2. Expected Recovery through Foreclosure and Disposition. Although not a requirement, the servicer is expected to perform a financial analysis to determine if a SS or DIL is in the best interest of the investor/mortgage insurer. The results any analysis must be retained in the servicing file.
3. Use of Borrower Financial Information. If financial and hardship information is documented and verified for HAMP, no additional financial or hardship assessment is required by HAFA. However, in accordance with investor guidelines, the servicer may request updated financial information to evaluate the borrower. Yeah , no duplication of documentation. They can however request updated financials. If a borrower was evaluated for HAMP based on verbal financial data, the servicer may send the borrower a Short Sale Agreement (SSA) and must require the borrower to deliver the financial information required under HAMP when the borrower returns the executed SSA. Per MHA servicers must verify financial information and obtain a signed hardship affidavit.
4. Property Valuation. The servicers must assess the current value of the property in accordance with the investor's guideline. It is the investors guidelines that dictate what tool is used to assess value, be it BPO's or appraisal's. Watch out though - some mortgage documents allow the cost of the valuation to be added on to the outstanding debt in the event the short sale or DIL doesn't happen.
5. Review of Title. The servicer must review readily available information provided by the borrower, the borrower's credit report, the loan file or other sources to identify subordinate liens and other claims on title. They can also order a title search.
6. Borrower Notice. When a HAFA short sale or DIL is not available, the servicer must communicate this decision in writing to any borrower that requested consideration. The notice must explain why a short sale or DIL under HAFA cannot be offered, provide a toll free telephone number that the customer may call to discuss the decision and otherwise comply with the notice requirements of Supplemental Directive 09-08, Borrower Notices. That means All Borrower Notices must be written in clear, non-technical language, with acronyms and industry terms such as "NPV"(Net Present Value) explained in a manner that is easily understandable. With the exception of the Notice of Incomplete Information, all Borrower Notices must be mailed no later than 10 business days following the date of the servicer's determination.