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 pursuant to this chapter, the Servicer must comply with the following steps to prepare and offer the Form 1135, Short Sale Agreement, (SSA) to the Borrower and send the appropriate Borrower Evaluation Notice (Offer a Home Affordable Foreclosure Alternative (HAFA) Short Sale)
3. Preparing and offering the SSA The Servicer is not required to obtain Freddie Mac's prior approval to enter into an SSA with the Borrower, provided that the Servicer complies with the following: Minimum acceptable net proceeds Allowable Transaction Costs SSA
4. Minimum acceptable net proceeds The Servicer must document the minimum acceptable net proceeds from the sale of the Mortgaged Premises in the Mortgage file prior to preparing and offering an SSA to the Borrower. The minimum acceptable net proceeds for a HAFA Short Sale are the 90 day "as is" marketing value as determined by the Broker's Price Opinion (BPO) or appraisal minus (1) the Allowable Transaction Costs as determined below, (2) the maximum amount payable to subordinate lien holders under General Terms and Conditions and (3) the Borrower relocation incentive paid under Borrower Incentive Compensation
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 until the initial SSA termination date is reached and only if authorized by Freddie Mac Decrease the minimum acceptable net proceeds unless authorized by Freddie Mac Disclose the minimum acceptable net proceeds amount to any party, including but not limited to the Borrower, the real estate broker and any prospective buyer, except as authorized by Freddie Mac
7. Allowable Transaction Costs Freddie Mac will pay up to a total of 9% of the final sales price towards (1) reasonable closing costs customarily paid by a seller in the jurisdiction where the Mortgaged Premises are located of up to 3% of the final sales price, and (2) real estate brokerage commissions of up to 6% of the final sales price. Any closing costs or commissions that exceed these percentages will not be paid by Freddie Mac.
8. SSA The SSA outlines the roles and responsibilities of the Servicer and the Borrower in the HAFA Short Sale process and provides key marketing terms. After the Servicer has performed an evaluation and determined that the Borrower is eligible for a HAFA Short Sale, the Servicer must prepare and send an SSA to the Borrower together with a Borrower Evaluation Notice pursuant to a HAFA Deed-in-Lieu.
9. SSA The Servicer must also send the Borrower Form 1136, Request for Approval of Short Sale (RASS), pre-populated with the Servicer's contact information, the address of the Mortgaged Premises and the Servicer loan number. 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 ("Effective Date"). The Effective Date must be stated in the SSA and is the date the SSA is mailed to the Borrower. The Servicer must not extend the termination date of the SSA without authorization from Freddie Mac as described in Section D65.5(h). The minimum list price which shall be the 90 day "as is" marketing value as determined by the BPO or appraisal, as applicable. See Section D65.4(b)(ii) for additional information.
11. SSA Requirements The Allowable Transaction Costs which may be deducted from the gross sale proceeds are (1) the reasonable closing costs customarily paid by a seller in the jurisdiction where the Mortgaged Premises are located of up to 3% and (2) real estate brokerage commissions of up to 6%, for a total of 9% of the final sales price paid by the buyer at closing. If the Servicer retains a vendor to facilitate the transaction, including a vendor retained by the Servicer to assist the listing broker, the Servicer must indicate that fact in the SSA. The Servicer may not require the vendor be paid from a portion of the brokerage commission or by the Borrower, but the Servicer may pay the vendor from the Servicer incentive payment received under Incentive Compensation.
12. SSA Requirements The amount of the monthly mortgage payment the Borrower will pay during the term of the SSA, which shall be equal to 31% of the Borrower's verified gross monthly income A closing date that is no less than 45 calendar days from the date of the sales contract without the consent of the Borrower and no more than 60 calendar days from the date of the sales contract without the consent of Freddie Mac
13. Borrower Obligations The Borrower must sign and return the SSA within 14 calendar days from the date of the evaluation notice, along with a copy of the real estate broker listing agreement, which expires no earlier than the termination date of the SSA, a copy of the multiple listing service ("MLS") listing advertising the Mortgaged Premises, if available, and information regarding any subordinate liens. In returning and signing the SSA the Borrower agrees to the obligations in the following slides
14. Borrower Obligations Provide all information and sign documents required to verify HAFA eligibility Cooperate with the listing broker to actively market the Mortgaged Premises and respond to Servicer inquiries Maintain the interior and exterior of the Mortgaged Premises in a manner that facilitates marketability
15. Borrower Obligations Work to clear any liens or other impediments to title that would prevent conveyance of clear, marketable title to the Mortgaged Premises Make the monthly payment stipulated in the SSA
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 improves significantly, the Borrower qualifies for and accepts a modification of the Mortgage, or the Borrower brings the Mortgage current or pays the Mortgage in full The Borrower or the listing broker fails to act in good faith in listing, marketing and/or closing the sale, or otherwise fails to abide by the terms of the SSA or applicable law 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, including, but not limited to, any evidence of a non-arms length relationship between any parties involved in the transaction (e.g., the Borrower, real estate broker, any prospective buyer, transaction facilitator, BPO provider or appraiser) The Borrower files for bankruptcy and the court declines to approve the SSA Litigation is initiated or threatened that could affect title to the Mortgaged Premises or interfere with a valid conveyance of clear, marketable title to the Mortgaged Premises
19. Causes for Termination Note: The Borrower's failure to make monthly payments on the Mortgage during the marketing period under the SSA is not a cause for termination, unless it is 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 on title to the Mortgaged Premises, unless the Servicer is certain based on its examination under Borrower Evaluation Criteria that the Borrower will be able to deliver clear, marketable title to a prospective purchaser or Freddie Mac.
21. Title work and identification of claims on title If the Servicer has previously ordered title work or obtained title work from the foreclosure file then the Servicer need only order updated title work. The Servicer must share the title work with the Borrower and/or the listing broker as necessary to assist them in communicating with subordinate lien holders or to resolve title issues, if any.
22. Title work and identification of claims on title The Servicer may not require the Borrower to pay in advance for the title work, but the Servicer may add the cost to the amount owed under the Mortgage to the extent permitted by the Note, Security Instrument and applicable law in the event that the HAFA Short Sale or HAFA Deed-in-Lieu is not completed.
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 for the title work, subject to the limits provided in Exhibit 57A, Approved Attorney Fees and Title Expenses via the Reimbursement System (available at http://www.freddiemac.com/singlefamily/service/tools.html).
24. Request for approval of a HAFA Short Sale The Borrower must submit the RASS to the Servicer when an offer for the Mortgaged Premises is received. The RASS provides the terms and conditions of the HAFA Short Sale and together with the sales contract, provides settlement instructions to the settlement agent. Within three Business Days following receipt of an executed sales contract, the Borrower or the listing broker must deliver to the Servicer a completed RASS describing the terms of the sale transaction, along with the information listed on the following slide
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 on letterhead from a lender Copies of all documentation indicating that subordinate lien holders have agreed to release their liens and the Borrower from liability A preliminary HUD-1 Settlement Statement
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 and all required attachments, the Servicer must indicate its approval of the proposed sale by signing Form 1137, Approval of Short Sale, and mailing it to the Borrower, provided the terms of the net sale proceeds equal or exceed the minimum acceptable net proceeds determined by the Servicer prior to execution of the SSA and all other terms and conditions in the SSA have been met.
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® and transmit the model to Freddie Mac. When entering the transaction terms into Workout Prospector, Servicers must meet the requirements on the following slides
29. Requirements Enter information related to the Borrower relocation incentive and the payment(s) to subordinate lien holders on the HUD-1 screen of Workout Prospector as follows: Line 1306: Enter the $3,000 Borrower relocation incentive with a note to indicate "Borrower Relocation Incentive." Line 505: Enter the total amount of payments made to subordinate lien holders In the "Recommendations" section of the Warnings and Comments screen, 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 provide the Freddie Mac loan number and notation "HAFA Short Sale – Approval"
31. Net sale proceeds equal or exceed minimum acceptable net proceeds The Servicer may not require, as a condition of approving a HAFA Short Sale, a reduction in the real estate commission below the commission stated in the listing agreement.
32. Net sale proceeds equal or exceed minimum acceptable net proceeds The Servicer may require that the closing take place within a reasonable period following acceptance of the RASS, but in no event may the Servicer require that the closing occur in less than 45 calendar days from the date of the sales contract without the consent of the Borrower or in more than 60 calendar days from the date of the sales contract without the consent of Freddie Mac.
33. Net sale proceeds less than minimum acceptable net proceeds Within ten (10) Business Days of receipt of the RASS and all required attachments, the Servicer may indicate its disapproval of the proposed sale by signing Form 1138, Disapproval of Short Sale, if the terms of the sale would yield net sale proceeds to Freddie Mac that are less than the minimum acceptable net proceeds. The Servicer must make a counteroffer for an amount that would meet the minimum acceptable net proceeds.
34. Net sale proceeds less than minimum acceptable net proceeds The Servicer must also evaluate the terms of the offer to determine if the Borrower would be eligible for a B65 Short Payoff and discuss that option with the Borrower. The Servicer must clearly communicate to the Borrower that he or she would not be entitled to any incentives under a B65 Short Payoff. If the Borrower agrees to a B65 Short Payoff, the Servicer must process the offer pursuant to the requirements of a short payoff
35. HAFA Short Sale request received, but Borrower not previously evaluated for HAMP If the Borrower has an executed sales contract that would result in a short payoff of the Mortgage and requests that the Servicer approve a HAFA Short Sale before an SSA has been executed, then the Servicer must inform the Borrower that he or she will be considered for a B65 Short Payoff instead of a HAFA Short Sale. The Servicer must clearly communicate to the Borrower that he or she would not be entitled to any incentives under a B65 Short Payoff.
36. HAFA Short Sale request received, but Borrower not previously evaluated for HAMP The Servicer must then process the sales contract in accordance with the requirements of a short payoff before the sales contract expires.
37. Extensions of SSA If an acceptable purchase offer has not been received prior to the expiration date of the SSA, the Servicer may submit a recommendation to Freddie Mac to extend the SSA if (i) the Borrower has fully complied with the SSA and the Borrower was not the cause of the failure of the Mortgaged Premises to sell, and (ii) the Servicer believes that an extension of the SSA is likely to result in an offer that meets the minimum acceptable net proceeds requirement.
38. Extensions of SSA The Servicer must submit a recommendation for an extension no fewer than 15 calendar days prior to the expiration of the SSA via e-mail with the subject line "Request for Extension of SSA" to HAFA@freddiemac.com. The Servicer must also provide any recommendations relating to the marketing of the Mortgaged Premises, such as the number of days the SSA should be extended, adjustments to the listing price and choice of real estate broker.
39. Extensions of SSA If Freddie Mac approves the extension, the Servicer must prepare a written extension agreement extending the SSA in accordance with Freddie Mac's instructions. The extension agreement must also amend other terms of the SSA, as necessary, and be executed by the Borrower before the expiration date of the SSA. If an extension is not recommended by the Servicer or not approved by Freddie Mac, the Servicer must consider the Borrower for a HAFA Deed-in-Lieu pursuant to HAFA Deed-in-Lieu
40. Closing, reporting and remitting requirements Within five Business Days after settlement of the HAFA Short Sale, 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 by Freddie Mac)
41. Required Documents Proceeds check or wire communication notice, which must include the Freddie Mac reference number Copy of the final sales contract, including any addenda to the sales contract Final HUD-1 Settlement Statement, which must be certified true if not the original and signed by the Borrower and the purchaser(s) 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 In addition, the Servicer must comply with the reporting and remitting requirements of Closing, reporting and remittance; however, the Servicer must advance from its own funds, and include with its remittance, the $3,000 Borrower relocation incentive. (Refer to Incentive Compensation)
43. Closing, reporting and remitting requirements Servicers must refer to and comply with the additional requirements of Closing, reporting and remittance with respect to charging off the deficiency, remitting additional proceeds and requesting reimbursement for expenses.