New HAFA Guidelines starting February 2011 - UPDATES

*This article was originated from Realtor.org, with full copyright going to the original author(s). Full story can be found at http://www.realtor.org/fedistrk.nsf/pages/wk01032011?OpenDocument#report_1_01_03_2011

On December 28, 2010, the Treasury Department released an update to the Home Affordable Foreclosure Alternatives Program (HAFA). The changes will increase the number of eligible borrowers who may participate in the program and should expedite approvals:

(1) A borrower's reason for relocation no longer needs to be connected to employment nor be of a certain distance from the property. Borrowers may have moved up to 12 months before certain dates in the HAFA process but may not have purchased another home.
(2) Servicers are not required to determine if the borrower's total monthly mortgage payment exceeds 31% of gross income. Borrowers will still be required to show a hardship.
(3) Servicers are now required to communicate approval, disapproval, or a counter offer no later than 30 calendar days after receiving an (i) executed sales contract, (ii) Alternative Request for Approval of Short Sale, and (iii) a signed Hardship Affidavit.
(4) If an unsolicited borrower requests HAFA, the servicer has 30 calendar days to determine the borrower's eligibility and, if eligible, send the borrower the Short Sale Agreement.
(5) HAFA will no longer impose a 6% cap on payments to each subordinate mortgage/lien holder. The $6,000 aggregate limit is still in effect.

The update also clarifies vendors of the servicer may not be paid from the real estate commission. Servicers must implement the changes by February 1, 2011.

HAFA Policy Update

Charles Dawson 202-383-7522, Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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My additions:

- How helpful has HAFA been for you and your clients? Do you notice your short sales going through faster?

- Do you think these changes will help?

It seems, although banks are trying to find ways to speed along the process (HAFA, Equator), there is still a terminal dis-ease of foreclosures eroding the market, faster than they can be dealt with. 2011, I think, will still see an ongoing outpour of foreclosures and REO's, even though we might see an uptick in actual short sales completed.

Your thoughts?

To your success,