HAFA Servicer Training 1

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January 2015 | Making Home Affordable

Training for Servicers

Home Affordable Foreclosure Alternatives (HAFA)

Agenda

Overview 1

HAFA Eligibility Criteria 2

HAFA Policy 3

2 January 2015 | Making Home Affordable

HAFA Process 6

Protections Against Unnecessary Foreclosure 5

Resources 7

HAFA Documentation 4

Overview

Home Affordable Foreclosure Alternatives (HAFA)

• Provide borrowers with a healthy transition to more affordable housing What Is HAFA?

• Borrowers sell their home as a “short sale” or transfer the title to the lender through a “deed‐in‐lieu of foreclosure” (DIL)

• HAFA offers a more efficient process than a traditional short sale

• Participating investors, servicers, and borrowers may be eligible for incentives

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• Eligibility criteria for homeowners and properties includes second homes, vacant properties, and investor properties;

• Allows displaced renters to receive relocation incentives;

O ti l th th d t f t i HAFA d t

HAFA Policy Highlights

Overview

• Optional rather than mandatory use of certain HAFA documents;

• Short sale terms may be pre‐approved;

• Increased investor reimbursement amounts for payments made for subordinate lien releases;

• Established guidelines for determining a pre‐approved hardship.

Overview

Provide assistance to borrowers who need to transition to more affordable housing:

•Opportunities for release of

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Standardize & streamline the short

sale process to address issues such as disjointed communications and lack of follow‐up by providing:

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What are the goals of HAFA?

subordinate liens and personal liability

•Financial incentives for borrowers, investors and servicers

•Specified response times and timeframes

•Upfront disclosure of short sale terms and conditions

Agenda

Overview 1

HAFA Policy 3

HAFA Process 6

Resources 7

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Existing Mortgage

• The mortgage loan must be a first lien that was originated on or before January 1, 2009.

• The mortgage loan must be delinquent or default must be reasonably foreseeable.

• UPB of the mortgage loan, prior to capitalization, must be less than or equal to:

o $729,750 for a one‐unit property;

o $934,200 for a two‐unit property;

HAFA Eligibility Criteria

Property

Borrower

$ , p p y;

o $1,129,250 for a three‐unit property;

o $1,403,400 for a four‐unit property.

• The property securing the mortgage must not be condemned.

• The mortgage loan is secured by a one‐to four‐unit property.

• The borrower must be able to document a financial hardship.

• The borrower must meet deadlines of December 31, 2015, for submission of a request (phone, mail, fax or email) for consideration for short sale or deed‐

in‐lieu, or approval of an executed sales contract, and September 30, 2016 for transaction closing.

• The borrower must be a “natural” person.

Agenda

Overview 1

HAFA Policy 3

HAFA Process 6

Resources 7

HAFA Policy

The HAFA Policy describes the basis by which borrowers will be considered for HAFA.

Additional eligibility requirements

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Monthly payment requirements

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Documentation requirements

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Information on how Minimum Net will be determined

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Allowable transaction costs

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Establishing property value and re‐

evaluation criteria

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HAFA Policy

• Process for re e al ation of propert al e HAFA Matrix

Each servicer must complete a HAFA matrix that identifies unique HAFA eligibility criteria and program rules. The matrix should also include:

• Process for re‐evaluation of property value

• Requirements for receipt of relocation assistance

Note: The servicer must provide the web address where the matrix is located to the Program Administrator to be posted on MakingHomeAffordable.gov.

Agenda

Overview 1

HAFA Policy 3

HAFA Process 6

Resources 7

HAFA Documentation

Servicers are no longer required to use the following documents:

• Short Sale Agreement, and

• Alternative Request for Approval of Short Sale.

Documentation Guidelines

Servicers may use the following forms to document HAFA transactions::

• Short Sale Notice

oServicer’s terms for approving a Short Sale

• Deed‐in‐Lieu (DIL) Agreement

• Acknowledgement of Request for Short Sale (ARSS)

oServicer acknowledges receipt of an executed sales contract from the borrower

All documents used must reflect the date of issuance from the servicer.

Note: If servicers choose not to use the MHA provided forms (Short Sale Notice, DIL, and ARSS), they must use written communications that are substantially similar in content.

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HAFA Documentation

Prior to closing a transaction, servicers are required to obtain a signed:

• HAFA Affidavit: representations from the borrower and purchaser regarding the Documentation Guidelines cont.

arm’s length nature of the transaction and property occupancy and acknowledgement of certain limitations on future resale of the property; and, depending on investor requirements, either

• Hardship Affidavit; or

• Request for Mortgage Assistance (RMA)

Note: Unless a borrower or co‐borrower is deceased or divorced, all parties who signed the original loan documents, or their authorized representatives, must execute the Hardship Affidavit/RMA and HAFA Affidavit.

Agenda

Overview 1

HAFA Policy 3

HAFA Process 6

Resources 7

Protections Against Unnecessary Foreclosure

All potentially eligible borrowers must be considered for HAFA before:

• The servicer refers the loan to foreclosure

• A foreclosure sale is conducted

Servicers must work to protect borrowers from unnecessary foreclosure

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Protections Against Unnecessary Foreclosure

• While determining the borrower’s eligibility and qualification for HAFA

• Until a date that is 5 business days after the date the servicer sends the notice that a HAFA short sale or DIL is not available

Foreclosure sales may not be completed:

that a HAFA short sale or DIL is not available

• While the terms of a pre‐approved HAFA short sale are effective

• Pending transfer of property ownership based on an approved sales contract

• Pending transfer of property ownership via a DIL by the date specified by the servicer in the DIL Agreement, or other notification or agreement

• Until the servicer has resolved an Escalated Case

Agenda

Overview 1

HAFA Policy 3

HAFA Process 6

Resources 7

HAFA Process

A borrower may not be solicited for HAFA until:

• Borrower has been evaluated for HAMP; OR

• Borrower has declined HAMP consideration.

Borrower Solicitation

Borrowers eligible for HAMP should be considered for other loan modification programs offered by the servicer prior to being evaluated for HAFA if:

• Borrower is not offered a TPP;

• Borrower does not successfully complete a TPP;

• Borrower defaults on a permanent HAMP modification; or

• Borrower declines the offer of HAMP consideration.

Note: There is no occupancy requirement and no limit on the number of properties owned by a borrower that may be approved under HAFA.

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HAFA Process

• Under CFPB Regulations, a servicer may be required to consider a borrower for HAFA while considering a borrower for HAMP or other home retention options.

• Unless the borrower has requested a non‐home retention option, servicers must determine that the borrower does not qualify for HAMP or any other Borrower Solicitation – If CFPB Regulations Apply

must determine that the borrower does not qualify for HAMP or any other home‐retention options prior to offering the borrower HAFA.

• Any determination regarding HAFA made by the servicer must be communicated to the borrower in accordance with the timelines for evaluating a Loss Mitigation Application.

Possible HAMP eligible borrowers must be considered for HAFA within 30 calendar days of the date the borrower:

• Does not qualify for a TPP (HAMP Tier 1 or HAMP Tier 2)

• Does not successfully complete a TPP and is not being evaluated for another

HAFA Process

HAFA Consideration

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modification

• Loses good standing on a HAMP permanent modification as long as the borrower is not being evaluated for another modification

Note: Changes to this policy are being updated based on the guidance on a complete loss mitigation application issued in SD 13‐09.

Within 30 calendar days of request, the servicer must consider the borrower for HAFA and provide written:

• Approval for HAFA and the terms of a pre‐approved HAFA short sale or DIL if the borrower is determined eligible;

Previously submitted Hardship Affidavit or RMA

HAFA Process – Pre Approved Short Sale

• Notification of other options the borrower may be eligible for, if any, if the borrower is determined ineligible for a HAFA short sale or DIL; or

• Non‐approval of any short sale or DIL.

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Within 30 calendar days of request, the servicer must consider the borrower for HAFA and provide written:

• Approval for HAFA and the terms of a pre‐approved HAFA short sale or DIL if the borrower is determined eligible;

Pre‐Determined Hardship; No previously submitted Hardship Affidavit or RMA

HAFA Process – Pre Approved Short Sale

• Notification of other options the borrower may be eligible for, if any, if the borrower is determined ineligible for a pre‐approved HAFA short sale or DIL; or

• Non‐approval of any short sale or DIL.

Note: A borrower has a “Pre‐Determined Hardship” if the borrower is delinquent on his or her mortgage by 90 days or more, and has a FICO score of below 620.

Within 5 business days of request, the servicer must send written confirmation to the borrower which should include the following:

• Copy of the Hardship Affidavit

• RMA, if applicable

No previously submitted Hardship Affidavit or RMA and Pre‐Determined Hardship

HAFA Process – Pre Approved Short Sale

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• Description of servicer’s HAFA Process

HAFA Process

Servicers are not required to proactively solicit borrowers in Borrowers in bankruptcy must be considered for HAFA if requested.

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Bankruptcy Considerations

Servicers are not required to proactively solicit borrowers in bankruptcy.

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Time allowances are acceptable for bankruptcy‐related delays.

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HAFA Process

When a HAFA short sale or DIL cannot be offered, the servicer must communicate such decision in writing to the borrower that:

• States the decision made and the reason why a short sale or DIL under HAFA cannot be offered.

Notice for Ineligible Borrowers

• Provides a toll‐free number that the borrower may call to discuss the decision.

• Includes the borrower’s eligibility for a proprietary short‐sale or DIL alternative.

• Includes the Homeowner’s HOPE™ Hotline Number (888‐995‐HOPE) with an explanation that the borrower can seek assistance at no charge from HUD‐approved housing counselors.

• Includes any information, disclosures or notices required by the borrower’s mortgage documents and applicable federal, state and local law.

Note: A foreclosure sale may not be conducted until 5 business days after sending a notice stating that the borrower was determined to be ineligible for HAFA.

HAFA Process

Perform financial analysis of anticipated recovery 2

Assess current value of property 1

Property Valuation and Assessment

Determine availability of a clear title 3

HAFA Process

Is expressed as either a fixed dollar amount, a percentage of the current market value of the property, or a percentage of the list price as approved by the servicer

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Determine the minimum acceptable net proceeds amount, which:

Must be at least equal to or less than the list price, minus the sum of

ll bl h b d d d f l d (

Determine Minimum Net

allowable costs that may be deducted from gross sale proceeds (or acceptable sale proceeds)

2

Must include allowable transaction costs by considering reasonable and customary real estate transaction costs for the community in which the property is located

3

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After sending the Short Sale Notice or other pre‐approval terms for a HAFA short sale, the Minimum Net requirement may not be increased until the initial date for expiration of the pre‐approved HAFA short sale terms is reached.

HAFA Process

Determine Minimum Net

The servicer must:

Determine the allowable transaction costs the investor is willing to pay from the sale proceeds

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Apply its HAFA Policy to outline the basis by which the minimum acceptable net proceeds will be determined

2

HAFA Process

• The short sale must be an arm’s length transaction with the net proceeds being applied to a discounted mortgage payoff acceptable to the servicer.

• The servicer may approve optional sale to non‐profit organization with the purpose of rental or resale to the borrower, as long as all other HAFA Arm’s Length Transaction

purpose of rental or resale to the borrower, as long as all other HAFA requirements are met.

HAFA Process

The servicer or investor must obtain mortgage insurance approval for loans that have mortgage insurance coverage for HAFA foreclosure alternatives.

Mortgage Insurance Approval Other Considerations

The servicer must identify in the Short Sale Notice, DIL Agreement or any proprietary form DIL notice or agreement, the amount of the monthly mortgage payment that the borrower is required to make, if applicable.

Payment Amounts

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HAFA Process

Short Sale Notice

• If the servicer determines a short sale is in the best interest of the investor, the servicer will prepare and send a Short Sale Notice to the borrower.

• Servicers are encouraged, but not required, to use the Short Sale Notice found Short Sale Notice

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on HMPadmin.com.

• If the servicer does not use the Treasury form posted on HMPadmin.com, the servicer’s Short Sale Notice should include specific information as detailed in the guidance within the Handbook.

Note: The borrower is NOT required to sign or return the Short Sale Notice.

HAFA Process

Short Sale Notice

List price approved by the servicer, or acceptable sales proceeds expressed as a net amount that the servicer will accept from the 2

Fixed termination date not less than 120 calendar days from the effective date of the Short Sale Notice

1

The servicer’s Short Sale Notice should include the following:

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transaction 2

Notice that the servicer will allow a portion of gross sale proceeds to be paid to subordinate lien holders in exchange for release liens 3

Notice that upon successful closing of a short sale,the servicer will record a mortgage lien release and the borrower will be released from all liability for repayment

4

HAFA Process

Within three business days of receipt of an executed sales offer, the borrower or the borrower’s listing agent must send the executed purchase offer and other documents the servicer requires being delivered to the servicer.

Net sale proceeds exceed Minimum Net Respond to Offer – Pre‐approved Short Sale Notice

If the net sale proceeds from a pre‐approved HAFA short sale equal or exceed the Minimum Net established by the servicer and the offer meets all other sales term and conditions of the pre‐approval, the servicer must notify the borrower of its approval of the proposed sale within 10 business days of receipt of the Offer Documents.

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HAFA Process

Respond to Offer – Pre‐approved Short Sale Notice

If the net sale proceeds from a pre‐approved HAFA short sale are less than the Minimum Net established by the servicer or the offer fails to meet any other sales term or conditions of the pre‐approval, the servicer, within 10 business days of

i t f th Off D t t tif th b f it l

Net sale proceeds are less than Minimum Net

receipt of the Offer Documents, must notify the borrower of its approval or disapproval of the offer, or intent to make a counter‐offer.

Under HAFA, servicers are not prohibited from accepting an offer with net proceeds that are less than the Minimum Net so long as the sale is in the best interest of the investor.

Note: The sale closing should take place within a reasonable period following acceptance of the executed sales contract, but no less than 45 calendar days from the date of the sales contract unless the borrower consents.

HAFA Process

Response to Offer – Sales Contract Prior to Pre‐Approved Short Sale Terms

Within 5 business days of receipt of an executed sales contract, the servicer must send written acknowledgment of receipt of the 2

Borrowers with an executed Sales Contract can request that the servicer approve a short sale under HAFA before the issuance of a Short Sale Notice by delivering the Sales Contract to the servicer.

1

borrower’s request using the ARSS form or any other written communication similar in content.

2

Servicer must determine the borrower’s eligibility for HAMP, notify the borrower of such eligibility, and allow the borrower to request HAMP consideration, if applicable.

3

HAFA Process

Borrower Scenarios

Within 30 calendar days of receipt of an executed sales contract, the servicer must verify the borrower’s eligibility for HAFA and communicate approval or disapproval of the sale, or provide a counter offer.

Previously submitted executed Hardship Affidavit or RMA, if applicable

Within 30 calendar days of receipt of an executed sales contract, the servicer must verify the borrower’s eligibility for HAFA and communicate approval or disapproval of the sale, or provide counter offer

No previously submitted Hardship Affidavit or RMA and Pre‐Determined Hardship

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HAFA Process

Borrower Scenarios

Within 30 calendar days of receipt of an executed Hardship Affidavit, the servicer must verify the borrower’s hardship and eligibility for HAFA and communicate approval or disapproval of the sale, or provide counter offer.

No Hardship Affidavit or RMA and/or Pre‐Determined Hardship

HAFA Process

Subordinate lien holders are paid in order of priority.

1

Servicer authorizes the settlement agent to allow any portion of the gross proceeds to be distributed as payment to non‐mortgage subordinate lien holders.

2

Subordinate Lien Considerations

All proceeds distributed as payment to subordinate lien holders are conditioned on receipt of lien releases and full release of borrower from liability.

3

Servicers must document the agreement in their servicing system and/or mortgage loan file.

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Servicers may establish an aggregate cap with regard to the amount of gross sales proceeds such lien holders may be paid, provided such cap is not less than $12,000. (Must be included in HAFA Matrix) 4

HAFA Process

• Negotiate with subordinate lien holders on behalf of the borrower (not mandatory)

S i

Deliver clear marketable title Borrower

Subordinate Liens – Roles and Responsibilities

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• Authorize settlement agent to use portions of gross sale proceeds to pay off subordinate lien holders

Servicer

• Release borrower from liens and liability

• Provide written commitment to release the borrower from all claims

Subordinate Lien Holder

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HAFA Process

Borrower may be eligible to claim relocation assistance for a tenant who occupies the rental property as a principal residence if the

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Borrower who occupies the property as a principal residence and is required to vacate may be eligible to receive $10,000 in relocation assistance for a HAFA short sale or DIL closing

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Relocation Assistance

tenant is required to vacate as a condition of the short sale or DIL Borrower must provide servicer with evidence that the borrower, tenant, or other non borrower occupant was residing in the property as a principal residence

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Servicer may not authorize a closing that includes HAFA relocation assistance unless and until the servicer has received evidence of occupancy and executed Dodd‐Frank Certification(s) and, if applicable, Non‐Owner Occupant Certification

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HAFA Process

The borrower’s financial situation improves 1

The servicer may terminate the terms of the pre‐approval before its expiration for the following reasons:

The borrower and/or listing agent fails to act in good faith in listing, marketing, or closing the sale

2

Short Sale Notice Termination

A significant change occurs to the property condition and/or value 3

Evidence of fraud or misrepresentation 4

Borrower files for bankruptcy and court does not approve the sale 5

Litigation is initiated or threatened that could affect title or interfere with conveyance

6

The borrower fails to make the monthly payment (if stipulated in the Short Sale Notice)

7

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HAFA Process

Servicers can use their discretion to offer and accept a DIL as part of the HAFA program, in accordance with its HAFA policy and investor guidelines.

• Borrower, tenant, or other non‐borrower occupant must agree to vacate the property

Deed in Lieu

property

• Property must be left in broom clean condition

• Borrower must deliver clear, marketable title

Note: Servicer may typically require that a borrower make a good faith effort to list and market the property before they will be willing to accept a DIL.

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HAFA Process

The following terms apply to a HAFA DIL:

Borrower conveys clear title to servicer and investor

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The written DIL communication must specify the property vacate date

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DIL may provide option for borrower to rent property or buy it back later

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Deed in Lieu Terms

Note: Written communication must be provided from the servicer to the borrower detailing the terms of a DIL, whether the servicer uses the Short Sale Notice, DIL Agreement or other written notice or agreement.

DIL may provide option for borrower to rent property or buy it back later Amount of the monthly mortgage payment required until closing, if any

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Notice that servicer will record a mortgage lien release upon successful closing of the DIL

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Agenda

Overview 1

HAFA Policy 3

HAFA Process 6

Resources 7

HAFA Resources

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Servicer Integration Team HAMP_Integration_Team

@fanniemae.com HAMP Solution Center

support@hmpadmin com

Resources

Additional Resources

[email protected]

•Training Resources

•NPV tools and documents

•Reporting resources

•Live webinar training calendar www.HMPadmin.com

HAFA Servicer Training 1

Training for Servicers

Home Affordable Foreclosure Alternatives (HAFA)

Agenda

Overview

Overview

Overview

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Agenda

HAFA Eligibility Criteria

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HAFA Policy

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HAFA Policy

Agenda

HAFA Documentation

HAFA Documentation

Agenda

Protections Against Unnecessary Foreclosure

Protections Against Unnecessary Foreclosure

Agenda

HAFA Process

HAFA Process

HAFA Process

HAFA Process – Pre Approved Short Sale

HAFA Process – Pre Approved Short Sale

HAFA Process – Pre Approved Short Sale

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

HAFA Process

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HAFA Process

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HAFA Process

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Agenda

HAFA Resources

Resources

Thank You

Discussion/Questions