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Home Affordable Foreclosure Alternatives (HAFA) A “Making Home Affordable” Initiative

Home Affordable Foreclosure Alternatives (HAFA) A “Making Home Affordable” Initiative.

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Home Affordable Foreclosure Alternatives (HAFA) A “Making Home Affordable” Initiative

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  1. Home Affordable Foreclosure Alternatives (HAFA)A “Making Home Affordable” Initiative

    This document is proprietary and solely for the use of AssetPlanUSA, its clients and/or partners including the California Association of REALTORS®. No part of it may be circulated or reproduced without prior written approval from AssetPlanUSA. This document is not endorsed by any government department. Revised 07-2011

  2. MARKET BACKGROUND

    Worst housing and economic crisis since Great Depression with over 10 million families affected! 6

  3. FORECLOSURE ALTERNATIVES MARKET BACKGROUNDWHAT ARE THE NUMBERS?

    June 2011 4.1 million delinquent or in some stage of foreclosure 2.6 million HAMP/HAFA eligible 60+ day delinquent loans As of July 2011, there are 675,447 active permanent HAMP modifications Total U.S. delinquency rate was 8.34% Unemployment rate nationwide 9.1% (nearly 14.1 million Americans unemployed) with California at 12% 6.2 million estimated “long-term unemployed” 12,888 successful HAFA transactions completed Any borrower who either fails or is denied a loan modification is someone who should consider foreclosure alternative options. *Source: Making Home Affordable Program Servicer Performance Report Thru July 2011, (as of 9//01/2011, Housing Scorecard www.financialstability.govAugust2011; Lender Processing Services Mortgage Monitor thru July 2011; U.S. Dept of Labor, Bureau of Labor Statistics August 2011

  4. MAKING HOME AFFORDABLE INITIATIVE

    Launched in early 2009 HARP & FHA Refinances Refinance for Underwater Borrowers HAMP & 2MP: Loan Modification Programs HAFA: Foreclosure Alternatives Short Sale Deed-in-Lieu

  5. THE HAMP AND HAFA RELATIONSHIP

    HAFA after HAMP Borrower Not Qualified; or Does Not Want Modification HAFA Short Sale or Deed-in-Lieu Debt Forgiveness First Lien upon qualification Subordinate liens upon effective negotiation Relocation Support $3,000
  6. Making Home Affordable (MHA) Plan (Non-GSE) Determine Servicer Participation Program Eligibility Who Owns the Loan Servicer Participation List http://makinghomeaffordable.gov/contact_servicerhtml Request HAFA (45 day consideration period) Lender May Offer HAMP Before HAFA Options HAMP 90 Day Trial Period No Yes HAFA Short Sale Deed-in-Lieu Deed-for-Lease Repurchase Option Permanent Loan (Stay in Home) Yes No Successful Close Possible Foreclosure

  7. INVESTOR GUIDELINES & CONSTRAINTS

    Who Owns U.S. Mortgages? Investors Usually Not Also Servicer Investor Not Bound by MHA Guidelines May Add Additional Guidelines

  8. MHA HANDBOOK FOR SERVICERS

    Published December 2010 Consolidated Resource for all MHA Information Supersedes all Treasury Directives Mortgages Not Owned or Guaranteed by Fannie Mae or Freddie Mac www.HMPadmin.com

  9. TREASURY HAFA BENEFITS

    Investor Benefits Foreclosure Expense Reduction Property Condition Maintained Loss Severities Reduced Faster Default Resolution
  10. Unpaid Principal Balance $500,000 Short Sale 48% Loss Severity REO 60% Loss Severity 20% less Loss Severity Investor receives $200,000 Investor receives $260,000 Effectively, Investor Receives a 30% Higher Return

  11. TREASURY HAFA ELIGIBILITY

    HAFA Eligibility - Similar to HAMP Principal Residence Can be Vacant up to 12 Months Prior First-lien Originated on or Before January 1, 2009 Delinquent or Will be in the Foreseeable Future Un-paid first lien balance =/- $729,750 2 units - $934,200 3 Units - $1,129,250 4 Units - $1,403,400 Verified Financial Hardship No Longer 31% of Monthly Gross Income SERVICERS MAY RE-EVALUATE BORROWERS PREVIOUSLY DETERMINED TO BE INELIGIBLE FOR HAFA USING NEW DIRECTIVE GUIDANCE

  12. IMPLICATIONS OF TREASURY HAFA

    Implications for Servicers and Investors HAFA Consideration Mandatory Before Foreclosure Includes Those Trying HAMP Did not qualify for HAMP Failed HAMP Trial Period Plan Delinquent on a HAMP Payments Borrower Requests Short Sale

  13. IMPLICATIONS OF TREASURY HAFA

    Implications for the Distressed Borrower Borrower’s Responsibilities: Must Cooperate with Real Estate Professional Must Deliver Clear Title Must Maintain Property Borrower Occupancy Can be Vacant Up to 12 Months Prior to SSA Borrower Didn’t Purchase Another Home Unless Servicer Offers HAFA Deed-for-Lease

  14. TREASURY HAFA INCENTIVES

    $3,000 Borrower Relocation Incentive $1,500 Servicer Incentive 1st Lien Investor Incentive Partially Reimbursed by Treasury (Up to $2,000) Allow Portion of Gross Sale Proceeds Paid to Subordinate Lien Holders ($6,000 Aggregate Cap) Servicer, on Behalf of Investor Determines Amount of UPB Paid to Subordinate Liens Servicer Must Include How Subordinate Liens Will be Paid in HAFA Policy

  15. TREASURY HAFA ROLES & RESPONSIBILITIES

    The Distressed Borrower Respond According to Timelines No Less Than 14 Days from Borrower Solicitation or SSA Mailing Provide Hardship Information Request for Modification & Affidavit “RMA” or Signed Hardship Affidavit List Property According to SSA Guidelines Comply With Terms Spelled Out in the SSA

  16. TREASURY PROCESS AND DOCUMENTS

    The Treasury HAFA Process – Standard Request for Modification Affidavit (RMA) or Signed Hardship Affidavit, Plus Two unique documents Short Sale Agreement (SSA) Request for Approval of Short Sale (RASS)

  17. TREASURY HAFA PROCESS & DOCUMENTS

    Request for Modification and Affidavit Submitted at Start of Process Servicer Review for HAMP If Denied HAMP, HAFA Offered SSA Then Generated Borrower Returns Document to Servicer in 14 Days Pre-set List Price and Terms

  18. TREASURY HAFA PROCESS & DOCUMENTS

    Short Sale Agreement (SSA) Overview Generated by Servicer Giving: Program Details Pre-Approved Terms and Conditions Borrower Agrees Property Listed After SSA Received Real Estate Professional Acknowledges

  19. TREASURY HAFA PROCESS & DOCUMENTS

    Request for Approval of Short Sale - RASS Generated by Servicer Sent with the Short Sale Agreement - SSA Completed by Borrower and Real Estate Professional Re-States Relevant SSA Terms Final Transaction Details

  20. TREASURY HAFA PROCESS & DOCUMENTS

    Request for Approval of Short Sale - RASS

  21. TREASURY HAFA PROCESS & DOCUMENTS

    RASS Disapproval of Short Sale Why Disapproved? Didn’t Comply Documents Not Included Proceeds Insufficient

  22. TREASURY HAFA PROCESS & DOCUMENTS

    Treasury HAFA Process – Alternative RASS Property Already Listed Executed Contract Received Submitted by Real Estate Professional After Offer Received Part of HAFA Package Servicer to Respond to Borrower No Later than 45 Days From Receipt of Request Response May be Approval, Disapproval or Counter-Offer

  23. TREASURY HAFA PROCESS & DOCUMENTS

    Deed-in-Lieu Agreement – DIL Borrower Voluntarily Transfers Property If Available – Offered in SSA or DIL Agreement Deed-for-Lease or Repurchase Option Incentives Still Available Full Release of Debt Clear & Marketable Title

  24. HAFA PROCESS: STANDARD

  25. HAFA PROCESS: ALTERNATIVE

  26. PRIMARY CHANGES SINCE LAUNCH

    TREASURY HAFA ONLY Supplemental Directive 10-18 Announced December 2010-Effective February 2011 Monthly Gross Income Vacating the Property Subordinate Lien Release Alternative Deed-in-Lieu AltRASS Timing

  27. PRIMARY CHANGES SINCE LAUNCH

    TREASURY HAFA ONLY Supplemental Directive 11-02 Announced March 2011-Effective June 2011 Validation of Residency Acknowledgement of Receipt Response in 45 Days If Not Able to – Every 15 Days

  28. PRIMARY CHANGES SINCE LAUNCH

    TREASURY HAFA ONLY Supplemental Directive 11-04 Announced May 2011-Effective September 2011 Assignment of Relationship Manager Assigned by no later than November 2011 Notification within 5 business days of assignment

  29. PRIMARY CHANGES SINCE LAUNCH

    TREASURY HAFA ONLY Supplemental Directive 11-08 Announced August 2011 Partially Effective Immediately, or by October 2011 Template Matrix at HMPAdmin.com Property Value Additional Eligibility Policies Borrower Communication Timelines Proactive Contact – 14 Days Use of HAFA over Proprietary SS/DIL

  30. PRIMARY CHANGES SINCE LAUNCH

    TREASURY HAFA ONLY Supplemental Directive 11-08 - Continued Subordinate Liens $6000 – Mortgages Other Lien Holders Re-Evaluation of Value Use of Relocation Incentive Transaction Costs NOT Release of Mortgage or Non-Mortgage Liens

  31. FANNIE MAE AND FREDDIE MAC HAFA

    Key Similarities HAMP Review Before HAFA Eligibility the Same as Treasury HAFA 31% of Gross Income Still Applies Forms and Processes the Same

  32. FANNIE MAE HAFA

    Fannie Mae Key Differences Borrower May Not Qualify If: Foreclosure is Imminent – within 60 days Borrower May Still Qualify If: Relocation for employment within prior 90 days

  33. FREDDIE MAC HAFA

    Freddie Mac Eligibility Differences: Borrower Must be 60+ Days Delinquent Allowable Transaction Costs Capped Total Closing Costs 9% Maximum Commission 6% Alternative RASS Not Permitted Documents Cannot be More Than 90 Days Old Mandates Monthly Mortgage Payments Not to Exceed 31% of Gross Income

  34. FANNIE MAE / FREDDIE MAC HAFA

    Borrower’s Financial Condition: Borrower Cannot Contribute to Sale HAFA Requirement No Borrower Promissory Notes Permitted Maximum Cash Reserves 3 x PITI or $5,000 (whichever is higher) Borrower Surplus Income May Cause Non-Qualification

  35. FANNIE MAE DEED-FOR-LEASE

    Fannie Mae Deed-for-Lease Deed-for-Lease Program (D4L) Borrower stays as Tenant No Repurchase Option No Lease-Back or Repurchase Program for Freddie Mac HAFA

  36. FANNIE MAE / FREDDIE MAC HAFA

    Servicer Duties and Responsibilities List Price FREDDIE MAC: 90 days “as is” Price Listing Agent Accountability - Monthly Marketing Plan and Updated Comps Price Adjustments Within MANP Clear Title Minimum monthly payment 31% Freddie Mac Additional termination requirements Source: Fannie Mae Announcement SVC-2010-07

  37. RESOURCES

    Additional Sources: www.makinghomeaffordable.gov (Consumers) www.hmpadmin.com (Servicers and Professionals) www.financialstability.gov www.FreddieMac.com www.eFannieMae.com Questions or Escalated Issues May be emailed Treasury: escalations@hmpadmin.com (Escalated Issues) ssdil@hmpadmin.com (Questions)

  38. CONTACT INFO

    GINNI@GINNIFIELD.COM 858-774-7063 Sept 7 2011 for CVAR Members www.car.org& www.cvar.org
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