Category Archives for "HAFA"

February 1, 2011

HAFA Update 2011: Effective NOW

There have been significant policy changes made to the HAFA Program (Home Affordable Foreclosure Alternatives) are effective as of today, February 1, 2011. Look these over, and if you or someone you know applied for HAFA in the past and were denied you are now eligible to reapply. According to CDPE.com, the new policies address changes in the following guidelines:

  • Monthly Gross Income Verification
  • Vacant Property Requirements
  • Release of Subordinate Liens
  • Timing for Issuance of Short Sale Aggreement
  • Timing for Response to Alternative Request for Approval of Short Sale
  • Real Estate Brokerage Commissions
  • Alternative Deed-in-Lieu Programs
  • Borrower Notices Timelines

Why is HAFA Updating its Guidelines?

  • Junior Lien Holders not Satisfied with Payouts
  • Lack of Efficiency Guidelines
  • Lack of Servicer Adherence to Deadlines

These changes will mean a lot in the coming months for gaining approval through HAFA. Through December 2010, only 342 sales were completed since HAFA’s inception. It has gotten off to a rough start like other foreclosure-prevention initiatives. When HAMP was introduced, there was also a lag between introduction and success in the market. The treasury has paid $4.3 million on HAFA compared to $4 billion on HAMP. With the amount of traditional short sales, the less-strict changes that have been made should prove HAFA to come around and improve its numbers.

HAFA Policy Changes in a Nutshell:

  • Servicers are no longer required to verify that a borrower’s mortgage payment exceeds 31% of his or her monthly gross income.
  • Timelines extended to assist in relocations: Property may  now be vacant or rented 12 months prior to short sale application instead of only 90 days.
  • Junior Lien Holders Incentivized: Elimination of the 6% payout cap to junior lien holders will reduce pushback , especially for borrowers who owe less than $100,000, which is a great percentage of distressed homeowners.
  • Servicers MUST issue a response to borrowers who are requesting HAFA assistance within 30 days
  • Alternative Requests for Approval of Short Sale (A-RASS) must receive an approval, disapproval or counter offer within 30 days – increasing a transaction’s efficiency
  • The previously excluded deed-in-lieu alternative program is now eligible for certain HAFA benefits, given a successfully executed DIL.
  • Borrowers can be evaluated for HAMP and HAFA simultaneously, and if they are not approved for one they won’t have to reapply and start all over again.

These changes will make it somewhat easier on HAFA applicants to get approved. According to CDPE.com, the average loss on a short sale is 15%, the average loss on a foreclosure can be up to 85% on a subprime mortgage. Giving more homeowners the opportunity to decrease the possible loss in a foreclosure situation will make this program worth while for many people looking for options.

New HAFA Guidelines!

Starting February 1st, Making Home Affordable will be releasing a new HAFA guidlines to enhance the government’s short sale program. This will make it more efficient and less restrictive for distressed homeowners to participate.

The new policies include:

  • Monthly Gross Income Verification
  • Vacant Property Requirements
  • Release of Subordinate Liens
  • Timing for Issuance of Short Sale Agreement
  • Timing for Response to Alternative Request for Approval of Short Sale
  • Real Estate Brokerage Commissions
  • Alternative Deed-in-Lieu Programs
  • Borrower Notices Timelines

We hope that this will help keep you informed with these upcoming changes!

HAMP Stats Increase in November with Permanent Mods Topping 500K (DSNews)

The following article is from DSNews.com regarding HAMP Stats Increasing, Published December 22, 2010:

The federal government’s principal foreclosure prevention program has put 504,648 distressed homeowners into permanently modified loans since it was launched in March 2009. Treasury released new numbers for the Home Affordable Modification Program (HAMP) Wednesday, and in addition to crossing the 500K threshold, the data show that servicers stepped up their use of the program last month.

Permanent modifications were granted to 30,000 borrowers in November, 26 percent more than in October. The number of trial modifications started also rose. In November, 31,300 new trial plans were initiated, up about 20 percent from the previous month.

Treasury says servicers are continuing to work through the backlog of HAMP trials that have lasted six months or more. The number of these aged trials has no fallen below 50,000.

According to Treasury’s report, for those borrowers in active permanent modifications, the median monthly savings is $524.41, or 37 percent of the median payment before modification. Aggregate reductions in monthly mortgage payments for borrowers who received permanent modifications are estimated to total $4.1 billion.
Critics of the program, though, point to the fact that at its current pace, HAMP will fall far short of the administration’s goal of helping 3 to 4 million homeowners save their homes from foreclosure. The Congressional Oversight Panel warned last week that “absent a dramatic and unexpected increase in HAMP enrollment…an untold number of borrowers may go without help.” The watchdog group estimates that the program will ultimately help only 700,000 homeowners.

The program has also been plagued with large fallouts, as homeowners in trial plans were unable to stay current on their modified payments or failed to meet program requirements for transitioning to permanent status. Of the 1.43 million trial plans extended, over half have been cancelled. In addition, 45,000 permanent mods have been terminated from the program.

Still, federal officials assert that HAMP has laid the groundwork for more sustainable modifications through servicers’ own proprietary programs and other constructive foreclosure alternative options.

For the full article, click here.
To speak with a professional about assistance with selling or purchasing a short sale home, contact us.

December 14, 2010

There are HAFA Success Stories!

The following is from CDPE.com

The following story was sent to CDPE.com by CDPE Steve Gillespie of Keller Williams Realty at the Lakes in Celebration, Florida, and represents the determination to succeed against the odds of getting HAFA short sale approval:

“An 80 year-old semi-retired professional and his 60 year-old wife were $400,000 underwater in their mortgage. He had heart surgery last year and she has MD (muscular dystrophy), so neither can work very much. They were in foreclosure and facing bankruptcy to escape, especially with a 2nd mortgage as part of their debt.

Litton Loan Servicing ignored the borrower’s first 2 requests for HAFA review. I then made the request for him, copying HAMP Escalations, and we received a phone call the next day with assurance that the SSA was on the way. It arrived the day after.

Litton gave us a list price right away, even before they did their BPO. We provided the packet up front, but they then mishandled the data for over 3 months causing significant delay. We actually had a full-price offer 2 days after the SSA was issued. However, by the time we got Litton’s final approval, we lost that buyer. Then, we found another buyer who will close the end of December. That buyer offered $10,000 less than list, and Litton accepted.

Settling with the 2nd was a significant challenge. The buyer had to use some protected assets and provide a partial payment before closing, and the 2nd was then willing to issue a clean settlement letter agreeing to take just the $6,000 provided by HAFA at the close and waive any further deficiency. When we actually got the final settlement letter from the primary lender (more than 4 months after we started), it felt like we had given birth to triplets!

The seller gushed in his thanks, and (at 82 years of age) said, in sort of a reverent whisper: “Now I can rebuild my credit.”

How devastating to be 82 and facing a financial hurdle you expect to carry with you to your grave. But how great the relief to be given the help to overcome, and know you can still recover. He very much wanted to leave his wife in a better financial position, and now has the hope and opportunity to make that happen. So cool!”

For more information, you can visit CDPE.com or click here for help dealing with a short sale in any capacity!

Wall Street Journal: What Happened to the Government’s Short Sales Program?

The following article was written by Nick Timiraos for The Wall Street Journal, published November 29, 2010:

In April, the Obama administration formally rolled out a new program, called Home Affordable Foreclosure Alternatives, that was designed to spur more short sales, where banks allow homeowners to sell their homes for less than the mortgage debt outstanding.

Like other foreclosure-prevention initiatives, this one appears to be off to a slow start — just 342 sales have been completed through September.

HAFA was designed as a cousin to the Obama administration’s Home Affordable Modification Program, HAMP, whose woes have been well documented. HAFA works like this: Servicers are supposed to consider short sales for borrowers who aren’t able to receive a HAMP modification. Because some 700,000 HAMP applicants have been ejected from that program, there’s a potentially large pool of borrowers who might be evaluated for HAFA.

Initially announced in May 2009, HAFA was also designed to help reduce wait times by streamlining the short sale process through standardized documents and approaches for short sales. Under the program, the government offers incentive payments to mortgage-servicing companies, investors and even the borrowers that accept a short sale under prescribed guidelines.

For example, second-lien mortgages receive 6% of the unpaid loan balance in a short sale, up to a maximum of $6,000, but they must agree to relinquish all claims against a borrower. (Our story on Saturday illustrated why seconds pose problems in short sales.) The program also provides $3,000 in “move-out assistance” to borrowers.

Many real-estate agents say banks have largely ignored the program and that they are applying it unevenly. “Banks are initiating the HAFA transaction and then after three weeks they say, ‘Naw, sorry, you didn’t qualify,’” says Greg Markov, a Phoenix real-estate agent. “That three weeks is a huge pain. You wasted all this time.”

Industry officials, meanwhile, say that HAFA has been hindered by extensive documentation requirements and restrictive qualification guidelines. A homeowner that’s already relocated isn’t HAFA eligible, for example, and neither are borrowers that apply within 60 days of a foreclosure date.

The program is also voluntary, which may limit participation from second-lien holders and mortgage insurance companies that see a financial reason to avoid a short sale that requires them to forgo the opportunity to seek deficiencies against borrowers.

“It looks good on paper, but you can’t make anyone participate,” says Kevin Kauffman, a Phoenix real-estate agent who says he’s closed 150 short sales but has yet to complete one through HAFA.

Still, the Treasury and other supporters say they’re optimistic that results will pick up. Because short sales take several months to close, it’s perhaps unrealistic to expect huge numbers of deals that would close within five months. Moreover, Fannie Mae and Freddie Mac didn’t issue their own participation rules until August.

“It does take a little bit of time to see results on these,” says Dave Sunlin, Bank of America’s senior vice president for short sales and bank-owned property sales. “The concept on paper is there.”

For this article, click here.

To speak with a Short Sales Specialist, click here.