By: Jacob Swodeck, PartnerFirst - Director of Education
I just celebrated my son's one-year birthday late last year. The party, the presents, the excitement-it was lots of fun! And there are always those well-intentioned people who asked questions like, "Is he walking yet, or saying words yet?" A one year birthday seems to bring about a desire to measure the stature or progress of a thing. Interestingly enough, HAFA turns one year old today (The Treasury's version). So, let us ask the questions about its progress, and stature. Is HAFA up and walking yet? Or is it still a cute blob rolling around on the floor? Is it speaking? Or is it just an innocent, irrelevant goo or a gah?
The Treasury Department announced last week that the HAFA program had now closed nearly 4,500 short sales and deeds-in-lieu. This is a far cry from the 661 HAFA closings that had closed up to December 1, 2010. That number embarrassed the current administration, and the Treasury Department was called upon to make the necessary changes to pull this program out of the mire. Using the one-year birthday metaphor further, let's say the program has gone from rolling to crawling. The Treasury's announcement that just over 10,000 homeowners have active HAFA agreements in place with their servicers is also positive news. When there are roughly 7,000,000 people defaulting on their mortgage, I guess it is hard to gauge what qualifies as a successful program.
Arguably, the program is still not reaching the ambitious projected numbers proclaimed prior to its launch. However, as a admitted critic and skeptic, I am actually very pleased with the changes brought about earlier this year with Supplemental Directive 10-18. Timelines are more defined, more proceeds given to junior liens, eligibility requirements are looser, and the scales have been tipped drastically. As it was originally written (Supplemental Directive 09-09), HAFA was very servicer-friendly with respect to timelines, procedures, and overall guidelines. Can you believe that whether it was an SSA HAFA sale, or an Alt. RASS HAFA sale, the servicers had no given timeline to approve the borrower into the program. All the while, the foreclosure clock was still ticking.
We can probably look forward to more positive changes on the horizon. President Obama made it crystal-clear that HAMP and HAFA would not "go away". That means, they will need to continue to be looked at, analyzed, and changed. Hopefully for the better.
First birthday score: C-