As you may have heard, by August 1, 2010 Fannie Mae and Freddie Mac, the formerly Home Affordable Foreclosure Alternatives Program (HAFA) exempt mortgage giants, are set to implement their own HAFA programs. For borrowers who are eligible for the Home Affordable Modification Program (HAMP) but were unable to secure a Loan Modification on their Fannie or Freddie loan, this is potentially promising news.
Today we’ll examine Fannie’s recently released HAFA Program Summary. Their stated goal with joining the program is to provide financial incentives for and simplify the process of short sales and deed-in-lieu (DIL) options in the face of foreclosure. For the most part, the Fannie version is in line with the wider HAFA program which includes the following:
- Any borrower who wishes to utilize the new program must have already been evaluated for HAMP, which gives them more options in the event of an unsuccessful evaluation and also removes the need for further eligibility investigation as the HAFA program will use the HAMP documentation. In addition, the program standardizes the steps, documents, and timeframes of short sale or DIL approval;
- Before the property is even listed, the borrower will be able to get pre-approved short sale terms;
- The servicer cannot condition their approval of a short sale on a reduction of the real estate commission outlined in the listing agreement;
- Fannie will release those who are successful in a HAFA short sale from future liability for the debt, and;
- Servicer and borrower will be entitled to certain incentives:
- Servicers will receive a $2,200 fee for a short sale, or a $1,500 fee for DIL
- Borrowers will receive $3,000 to assist with relocation expenses
Fannie’s documents and a full Program outline can be found at their website. Given the amount of foreclosures Fannie has been aggressively pursuing across the country (even being known to refuse to postpone a trustee’s sale with a viable short sale offer before them), one might be forgiven for questioning the sincerity of their commitment to providing foreclosure alternatives. Next time we’ll look at Freddie Mac and their HAFA program.
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