New HAFA Changes Widen Loopholes for Servicers

By: Jacob Swodeck, PartnerFirst - Director of Education

Well, this morning was one of those mornings when you know something isn't right.  

My coffee didn't taste right.  My neck hurt from sleeping wrong.  And, to top it off -HAFA changed...again! Supplemental Directive 10-18 from December 28, 2010 was an encouraging sign for us Realtors and for struggling homeowners.  The HAFA program seemed to have gotten just the improvements it needed to make a dent in this national foreclosure crisis.  Swifter timelines (30 calender days) for servicers to approve or reject HAFA short sales was a big step in the right direction.  Not any more...

As per the brand new Supplemental Directive 11-02, the servicers now have a major loophole. Read it for yourself:

Extension of Response Time

 
This Supplemental Directive clarifies the time  for considering a borrower’s request for a short sale or DIL as currently set forth in Section 3 of Chapter IV of the Handbook and extends the timelines established in Supplemental Directive 10-18 for the time a servicer has to respond to a borrower’s request for a short sale or DIL and provide an SSA or a DIL Agreement or to respond to an Alternative RASS. Within 45 calendar days of the date a borrower requests a short sale or DIL (whether the request is in response to the servicer’s notification under the first paragraph of Section 4 of Chapter IV of the Handbook or is initiated by a borrower) or submits an Alternative RASS, the servicer must complete and send to the borrower an SSA or a DIL Agreement, as applicable, a written notification that the borrower will not be offered a short sale or DIL or a written response to the Alternative RASS. If the servicer is unable to respond within 45 calendar days, the servicer must send a written status notice to the borrower on or before the 45th calendar day, with written updates every 15 calendar days thereafter, until the servicer is able to provide an SSA or a DIL Agreement, a written notification that the borrower will not be offered a short sale or DIL or a written response to the Alternative RASS. 

Basically, the Servicers got let off the hook.  It went from a hard 30-day timeline to get out an SSA or an answer on an Alt. RASS, to a total of 45 days.  The caveat (loophole) is, if they (servicers) cannot meet that deadline, all they have to do is issue a written update notice every 15 days.  

This fresh revision applies only to non-GSE HAFA sales and is very discouraging.  I'd love to be a fly on the wall in the meetings on Capitol Hill where the national servicers pleaded to Timothy Geithner and the default task force to change the guidelines set forth in SD 10-18.  In all honesty, I had a feeling it was too good to be true.  The bottom line is that this is a step backwards for us Realtors, and homeowners, due to the fact that the servicers were ill-equipped to comply with SD 10-18's staunch guidelines.  So maybe this is just a compromise. The silver lining may be that hopefully now the servicers have a program they can actually implement?

Let's hope...have a great weekend.