Presentation Transcript

1. HAFA Short Sale

2. Preparing and offering the SSA If the Servicer evaluates the Borrower and determines that the Borrower is eligible for a HAFA Short Sale The Servicer must comply with the following steps
3. Preparing and offering the SSA The Servicer is not required to obtain Freddie Mac's prior approval ,provided: Minimum acceptable net proceeds Allowable Transaction Costs SSA
4. Minimum acceptable net proceeds The Servicer must document the minimum acceptable net proceeds The Minimum acceptable net proceeds determined by: Broker's Price Opinion (BPO) or appraisal minus : (1) the Allowable Transaction Costs (2) the maximum amount payable to subordinate lien holders (3) the Borrower relocation incentive paid
5. Minimum acceptable net proceeds example For example, if the 90 day "as is" marketing valuation of the Mortgaged Premises is $100,000, then the minimum acceptable net proceeds will be $82,000: $100,000 (gross sales price) -$9,000 (maximum Allowable Transaction Costs) -$6,000 (maximum aggregate payment to subordinate lien holders) - $3,000 (Borrower relocation incentive) $82,000 (minimum acceptable net proceeds)
6. Minimum acceptable net proceeds After signing an SSA, the Servicer must not: Increase the minimum acceptable net proceeds Decrease the minimum acceptable net proceeds unless authorized by Freddie Mac Disclose the minimum acceptable net proceeds amount to any party
7. Allowable Transaction Costs Freddie Mac will pay up to a total of 9% of the final sales price towards (1) reasonable closing costs paid by a seller. (2) Real estate brokerage commissions of up to 6% of the final sales price.
8. SSA The SSA outlines the roles and responsibilities of the Servicer and the Borrower in the HAFA Short Sale process. After the Servicer has performed an evaluation, the Servicer must prepare and send an SSA to the Borrower.
9. SSA The Servicer must also: Send the Borrower Form 1136, Request for Approval of Short Sale (RASS) Prior to sending the SSA and RASS to the Borrower, the Servicer must complete all missing information and delete all inapplicable language In accordance with the information on the following slides
10. SSA Requirements A fixed termination date that is 120 calendar days from the effective date of the SSA The minimum list price which shall be the 90 day "as is" marketing value
11. SSA Requirements The Allowable Transaction Costs which may be deducted from the gross sale proceeds are (1) the reasonable closing costs (2) real estate brokerage commissions of up to 6%, for a total of 9% of the final sales price If the Servicer retains a vendor , the Servicer must indicate this in the SSA.
12. SSA Requirements The amount of the monthly mortgage payment the Borrower will pay during the term of the SSA A closing date that is no less than 45 calendar days from the date of the sales contract
13. Borrower Obligations The Borrower must sign and return the SSA within 14 days A copy of the listing agreement A copy of the multiple listing service ("MLS") listing Information regarding any subordinate liens.
14. Borrower Obligations Provide all information and sign documents required to verify HAFA eligibility Cooperate with the listing broker Maintain the interior and exterior of the Mortgaged Premises
15. Borrower Obligations Work to clear any liens or other impediments to title Make the monthly payment
16. Monitoring marketing activity; cause for termination The Servicer must terminate the SSA before its expiration if any of the events in the following slides occur
17. Causes for Termination The Borrower's financial situation The Borrower or the listing broker fails to act in good faith A significant change occurs to the condition and/or value of the Mortgaged Premises
18. Causes for Termination There is evidence of fraud or misrepresentation The Borrower files for bankruptcy and the court declines to approve the SSA Litigation is initiated or threatened
19. Causes for Termination Note: The Borrower's failure to make monthly payments on the Mortgage is not a cause for termination, unless accompanied by another breach of the SSA.
20. Title work and identification of claims on title After receipt of the signed SSA from the Borrower, the Servicer must order title work to identify subordinate liens and other claims There are, of course, exceptions
21. Title work and identification of claims on title If the Servicer has previously ordered title work The Servicer must share the title work with the Borrower and/or the listing broker
22. Title work and identification of claims on title The Servicer may not require the Borrower to pay in advance However, the Servicer may add the cost to the amount owed under the Mortgage
23. Title work and identification of claims on title If a HAFA Short Sale or Deed-in-Lieu is completed, the Servicer may request reimbursement of the expense
24. Request for approval of a HAFA Short Sale Submitting the RASS to the Servicer The RASS provides the terms and conditions Delivering to the Servicer a completed RASS
25. What is Required A copy of the executed sales contract and all addenda Buyer's documentation of funds or buyer's pre-approval or commitment letter Copies of all documentation indicating that subordinate lien holders have agreed to release their liens and the Borrower from liability A preliminary HUD-1
26. Approval or disapproval of a HAFA Short Sale Two aspects: Net sale proceeds equal or exceed minimum acceptable net proceeds Net sale proceeds less than minimum acceptable net proceeds
27. Net sale proceeds equal or exceed minimum acceptable net proceeds Within ten (10) Business Days of receipt of the RASS, the Servicer must indicate its approval Determined by the Servicer prior to execution
28. Net sale proceeds equal or exceed minimum acceptable net proceeds Within one (1) Business Day of approval of a RASS, the Servicer must enter all terms of the transaction and other required information into Workout Prospector®
29. Requirements Enter information related to the Borrower relocation incentive, etc., on the HUD-1 screen of Workout Prospector In the "Recommendations" section, indicate the following in all caps: HAFA SHORT SALE
30. Requirements Send an email to NPL_file_prep@freddiemac.com and In the subject line of the e-mail enter the Freddie Mac loan number and notation "HAFA Short Sale – Approval"
31. Net sale proceeds equal or exceed minimum acceptable net proceeds HAFA Short Sale What may not be required
32. Net sale proceeds equal or exceed minimum acceptable net proceeds The possible closing date.
33. Net sale proceeds less than minimum acceptable net proceeds The Servicer may indicate its disapproval of the proposed sale
34. Net sale proceeds less than minimum acceptable net proceeds The Servicer must also evaluate the terms of the offer
35. HAFA Short Sale request received, but Borrower not previously evaluated for HAMP If Borrower has an executed sales contract that would result in a short payoff of the Mortgage. The Servicer must clearly communicate information to the Borrower
36. HAFA Short Sale request received, but Borrower not previously evaluated for HAMP The Servicer must process the sales contract in accordance with the requirements of a short payoff
37. Extensions of SSA A recommendation to Freddie Mac to extend the SSA if (i) The Borrower has fully complied with the SSA (ii) The Servicer believes an extension will result in an offer
38. Extensions of SSA The Servicer must submit a recommendation for an extension no fewer than 15 days prior to the expiration "Request for Extension of SSA" to HAFA@freddiemac.com Must also provide recommendations relating to the marketing of the Mortgaged Premises
39. Extensions of SSA If Freddie Mac approves the extension, must prepare a written extension agreement The extension agreement must also amend other terms of the SSA If an extension is not recommended nor approved, must consider the Borrower for a HAFA Deed-in-Lieu
40. Closing, reporting and remitting requirements Within five Business Days, the Servicer must submit copies of the documents listed in the following slide to Freddie Mac Via fax at (571) 382-4910 (or as otherwise directed)
41. Required Documents Proceeds check or wire communication notice Copy of the final sales contract, including any addenda Final HUD-1 Proof that subordinate liens have been paid and commitment from the subordinate lien holder(s) to release the lien(s)
42. Closing, reporting and remitting requirements The Servicer must comply with the reporting and remitting requirements of Closing, reporting and remittance The Servicer must advance from its own funds
43. Closing, reporting and remitting requirements Servicers must refer to and comply with the additional requirements of : Closing, Reporting and remittance Remitting additional proceeds and requesting reimbursement for expenses.