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On Monday, the ""Charfen Institute"":http://www.charfen.com/ hosted a webinar to discuss short sale updates from the government's ""Home Affordable Foreclosure Alternatives Program"":http://www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx (HAFA), which is part of the Making Home Affordable program.
[IMAGE]Laurie Maggiano, director of policy at Treasury's homeownership preservation office, and Alex Charfen, CEO of the Charfen Institute, led the conversation on the updates.
The new policy changes for HAFA will take effect February 1, 2013, but servicers can begin implementing the changes earlier.
One of the updates discussed during the webinar is the requirement for servicers to make a decision on a borrower's request for a HAFA short sale within 30 days. Prior to the change, servicers had 45 days.
Another update that can speed up the short sale process for certain borrowers is the introduction of a ""pre-determined hardship."" If a borrower is 90 days or more delinquent and has a FICO score that is less than 620, he or she is considered to have a pre-determined hardship.
According to ""supplemental directive 12-7"":https://www.hmpadmin.com/portal/programs/docs/hafa/sd1207.pdf, borrowers with a pre-determined hardship still must execute a hardship affidavit before closing a HAFA short sale, but servicers do not have to further validate the hardship.
The hardship affidavit can be found online at ""hmpadmin.com"":https://www.hmpadmin.com/portal/index.jsp.
[COLUMN_BREAK]This is government doing what it should be doing--setting standards and letting the private sector take over, Maggiano explained.
During the webinar, Maggiano stressed that borrowers who are experiencing a hardship but have a good credit score and are not delinquent can still qualify for a HAFA short sale. But, those borrowers will need to explain the nature of their hardship in the affidavit.
In addition to helping borrowers who may not be delinquent, HAFA also provides short sales for non-owner occupied properties and offers relocation assistance to those tenants living in the distressed property. Tenants are eligible to receive up to $3,000, the webinar explained. HAFA was modified in June to allow for non-owner occupied properties to be eligible under the program.
Another change discussed during the webinar is the requirement for both the seller and buyer to execute a new affidavit that affirms the sale ""represents an arms-length transaction and that no money is being given or received that is not reflected on the HUD 1 Settlement Statement,"" the directive stated.
Treasury also increased the reimbursement amount to primary mortgage investors for payments to subordinate lien holders. The reimbursement to investors can be up to $5,000. Prior to the change, investors were eligible to receive $2,000.
Another policy update helps to prevent short sale fraud. Starting in February, resales can't occur within 30 days of a HAFA short sale closing. Before the change, resales couldn't be completed within 90 days of closing. In addition, resales for more than 120 percent of the HAFA short sale price are not allowed if they occur between 31 and 90 days of closing.
The directive also stated certain HAFA documents are optional rather than mandatory. For example, servicers are not required to use forms such as SSA, DIL Agreement, Request for Approval of Short Sale (RASS), and Alternative Request for Approval of Short Sale (Alt RASS), according to the directive.
The changes do not apply to mortgages backed by Fannie Mae or Freddie Mac. The GSEs previously ""announced"":http://dsnews.comarticles/short-sales-will-find-approval-faster-through-new-guidelines-for-gses-2012-08-21 their own revised short sale guidelines.
