Home Affordable Foreclosure Alternatives. September 2011 Making Home Affordable

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1 Home Affordable Foreclosure Alternatives

2 Home Affordable Foreclosure Alternatives HAFA This presentation will cover the following: 1 Overview 2 Advantages 3 Components and Process Phases 4 Resources 5 Success Stories 6 Discussion/Questions 2

3 Home Affordable Foreclosure Alternatives HAFA Overview 3

4 HAFA Advantages HAFA has key benefits for the homeowner. Releases homeowner from future liability of mortgage debt Homeowner receives $3,000 in relocation assistance Less negative effect on homeowner s credit score Homeowner incurs no out of pocket expenses Foreclosure cannot take place while the homeowner is being considered for HAFA Servicer will assign a relationship manager to work with the homeowner 4

5 What are the Goals of HAFA? Key Components of the Program Goal 1 Provide assistance to Provide assistance to homeowners homeowners who need to who need to transition to more transition to more affordable affordable housing. housing. Release of subordinate liens and personal liability. Financial incentives for homeowners, investors and servicers. Goal 2 Standardize & streamline the short sale process. Uniform documents. Specified response times and timeframes. Upfront disclosure of short sale terms and conditions. 5

6 Protections Against Unnecessary Foreclosure Eligible homeowners must be considered for HAFA before: The servicer refers the loan to foreclosure. A foreclosure sale is conducted. At the servicer s discretion, the servicer may initiate foreclosure or continue with an existing foreclosure, but may not complete the sale. 6

7 HAFA Eligibility Criteria Property One to four unit owner occupied. Primary residence at some point in the last 12 months. Homeowner Has not purchased a new property within the last 12 months. Has documented financial hardship. Is delinquent or default is reasonably foreseeable. Mortgage First lien mortgage balance equal to or less than $729,750 (1 unit). Mortgage originated on or before January 1,

8 HAFA Documents Summary SSA Short Sale Agreement RASS Request for Approval of Short Sale Alternative RASS Alternative Request for Approval of Short Sale DIL Agreement Deed-in-Lieu Agreement 8

9 HAFA Entry Points A homeowner can enter HAFA in several ways: From HAMP Without first being in HAMP Property already listed Homeowner does not qualify qualify for a Trial for Period a Trial Period Plan (TPP). Plan. Homeowner Homeowner does does not not successfully successfully complete complete a Trial TPP. Period Plan. Homeowner misses at least two consecutive payments on a on a permanent HAMP permanent modification. HAMP modification. Homeowner requests short Homeowner sale or DIL. requests Short Sale or Deed in Lieu. Homeowner requests short sale or DIL. deed in lieu. Homeowner sends an executed sales contract to the servicer. 9

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11 HAFA Screening Phase 30 Days Servicer screen homeowner and notify for HAFA 14 Days Homeowner responds to notification Homeowner request short sale or DIL 10 Days Servicer acknowledges homeowner s request 10 Days Servicer acknowledges homeowner s request 11

12 HAFA Screening Phase Bankruptcy Consideration 30 Days Screen homeowner and notify for HAFA 1 Homeowner in bankruptcy must be considered for HAFA if requested. 2 Servicers are not required to proactively solicit homeowners in bankruptcy. 3 Time allowances are acceptable for bankruptcy related delays. 12

13 HAFA Evaluation Phase 45 Days Homeowner evaluation / SSA preparation 14 Days Homeowner signs and returns SSA 13

14 HAFA Evaluation Phase Required Homeowner Documentation 45 Days Servicer evaluation / SSA preparation 1 RMA or Hardship Affidavit 2 Dodd Frank Certification 3 Servicer may, but is not required to obtain financial documents 14

15 HAFA Marketing Phase 120+ Days 3 Days 10 Days 45+ Days List property Receive offer Respond to offer Close transaction 15

16 Working Together for Success Homeowner Responsibilities Provide all information and sign documents required within required timeframes. Respond to all servicer inquiries. Cooperate with the listing broker to actively market the property. Maintain the property in a manner that facilitates marketability, including: Interior and exterior maintenance, Payment of utilities, association/condo dues, fire and hazard insurance, and Report property damage requiring an insurance claim to repair. Work to clear any liens or other title impediments that would prevent conveyance. Make the monthly payment stipulated in the SSA, if applicable. Agent Responsibilities Listing agent should check market value of property regularly to monitor fluctuations. Listing agent should monitor and respond to all homeowner and/or servicer inquiries to ensure timely two way communication between parties. Listing agent will work with homeowner to engage the subordinate lien holders in efforts to obtain lien under $6,000 subordinate lien cap (mortgage and nonmortgage debt). 16

17 HAFA Marketing Phase Property Valuation & Disputes 3 Days Receive offer Re evaluation Value Procedures Determination Periodically re evaluate property value. Servicer determines property value in accordance with investor Reconcile guidelines discrepancies during between the evaluation independent phase. assessment and market value. Value is communicated in the SSA as the list price. Re evaluation Procedures Periodically re evaluate property value. Reconcile discrepancies between independent assessment and market value. Homeowner Disputes Homeowner can dispute property value. Procedures by which a dispute can be made must be listed on each servicer s HAFA Matrix. 17

18 HAFA Marketing Phase Submitting Offer to Servicer 3 Days Receive offer Within 3 business days of receipt of an executed sales contract, the homeowner or the listing agent sends the a completed RASS with supporting documents to the servicer. Supporting documents include the following: 1 A copy of the executed sales contract and all addenda. 2 3 Buyer s documentation of funds or buyer s pre approval or commitment letter. All information regarding the status of subordinate liens and/or negotiations with subordinate lien holders. 18

19 HAFA Marketing Phase Approval or Denial of the Offer 10 Days Respond to offer Within 10 business days of receipt of the RASS, the servicer must determine whether to approve the short sale and provide a decision back to the homeowner 1 2 If the net proceeds available for payment to the servicer are equal to or exceed the pre determined minimum acceptable net proceeds amount and all other program conditions are met, the servicer must approve the short sale. The servicer may require that the sale closing take place within a reasonable period following acceptance of the RASS (but no less than 45 calendar days from the date of the sales contract without the homeowner s consent). 3 Decision is documented in the servicer section of the RASS and sent back to the homeowner. 4 Servicer may not require any reduction to the real estate commission amounts. 19

20 HAFA Marketing Phase Closing the transaction 3 Days Receive offer Term of Sale Section of the RASS The RASS should identify key costs expected at closing. 20

21 HAFA Process Summary Timeline Screening Phase Evaluation Phase Marketing Phase Trigger event to begin HAFA screening Homeowner has 14 calendar days to respond with request for consideration for HAFA Servicer has 45 calendar days to deliver an SSA to homeowner Homeowner and/or listing agent has minimum of 120 calendar days to market property Servicer has 10 business days to approve or deny the sale or provide a counter offer 30 Days 14 Days 10 Days 45 Days 14 Days 120+ Days 3 Days 10 Days 45+ Days Servicer has 30 calendar days to offer consideration under HAFA Servicer has 10 business days to acknowledge homeowner s request Homeowner has 14 calendar days to return SSA to servicer Homeowner and/or listing agent has 3 business days to submit offer with RASS to servicer Servicer schedules closing for no less than 45 calendar days. Upon closing, homeowner receives $3,000 relocation assistance 21

22 Alternative Request for Short Sale RASS Process Homeowner and/or listing agent submits Alternative RASS with executed contract and RMA. Homeowner has 14 calendar days to respond to request for HAMP consideration. Servicer schedules closing for no less than 45 calendar days. Upon closing, homeowner receives $3,000 relocation assistance. 14 Days 45+ Days Listing / Marketing Eligibility / Evaluation Approval / Closing Servicer has 10 business days to acknowledge homeowner s request. Servicer notifies homeowner about potential HAMP eligibility. Servicer has 45 calendar days to approve, deny or provide counter offer. 22

23 Deed In Lieu of Foreclosure Terms 1 Homeowner conveys clear title to servicer or investor. 2 Homeowner negotiates subordinate liens. 3 DIL Agreement may provide option for homeowner to rent property. 4 DIL Agreement may allow homeowner to re purchase property at a later time must be included in servicer HAFA Policy. 23

24 HAFA Resources Get help with questions about HAFA at 24

25 Trusted Advisors Escalate Tough Cases HAMP Solution Center (HSC) helps trusted advisors with cases that are difficult to resolve. 25

26 Requesting an Escalated Case Trusted advisor or homeowner escalates a case for review and resolution Case Submission Form MHA Third Party Authorization Form 26

27 MakingHomeAffordable.gov 27

28 HAFA Success Stories A smooth transaction helps a Florida family move forward Florida From Vicki O. of Prudential Florida Realty: We feel relieved! When Vicki s client did not initially qualify for a HAMP modification, the servicer recommended HAFA. The servicer was responsive and worked toward a quick turnaround five weeks to approval from the time Vicki found a buyer. Vicki stated that the HAFA transaction was one of the smoothest transactions she ever had. The seller owed approximately $150,000 on the mortgage with a final sales price of $39,500. The HAFA short sale closed with no deficiency judgment for the seller and left this Florida family saying, We feel relieved!. With a new lease on life, the client used part of the $3,000 relocation incentive to pay for the security deposit and first month s rent on their new rental home. 28

29 HAFA Success Stories Many THANKS from a couple in California California Client: Craig & Nancy L. Agency: Marjorie S. and Harald S. of Stangl Advisors San Francisco, CA THANKS just doesn t seem adequate for all your efforts on our behalf A pending divorce and loss of income established the hardship for Craig and Nancy L. of California. The property was listed for $450,000 and the couple owed $650,000 on the first lien and $206, on the second lien. Unfortunately, their first experience was marred by a real estate professional who mismanaged the entire process. After having the property listed for 18 months to no avail, foreclosure was just around the corner. Craig and Nancy were then referred to Stangl Advisors. Marjorie and Harald at Stangl introduced their new clients, Craig and Nancy, to HAFA and they were happy to learn that such a program existed. After only seven months, Craig and Nancy closed escrow at an approved sales price of $475,000 and were able to make a healthy transition without the burden of a deficiency judgment! In a letter to Marjorie and Harald, they wrote, THANKS just doesn t seem adequate for all your efforts on our behalf. 29

30 HAFA Success Stories Communications is the basis for our success Arizona Agency: Coldwell Banker Residential Brokerage A key to success is to provide clear, concise communication to all parties throughout the process: sellers, buyers & servicers. At Coldwell Bankers, we developed a short sale Q&A for sellers to ensure they understand the HAFA program, as well as complete a financial worksheet and provide a 10-step worksheet with action items and timelines. We engage with the servicer and establish a strong working relationship, building confidence and trust, while adhering to consistent dialogues, maintain communication logs, and follow up. We see ourselves as the conduit of the process, communication, setting expectations, and follow through! Success: I completed 3 short sales in the first 6 months of 2011 and have 4 in process! 30

31 Discussion/Questions Thank You 31