HAFA Short Sale Important Info Summed up

							         HAFA Short Sale Important Info Summed up
                                 Created by: Danielle Groeneweg
                          Email: dgroeneweg@muljatgroupnorth.com
                           Website: www.whatcomcountysearch.com
               Please call for assistance in determining if a short sale is right for you
                                             360.483.6490



1) Note about Short Sales
     i) If deficiency not discharged, there can be:
            (a) Demand option for up to 6 years – what this means is that the
                collection agencies who purchase the short sale deficit debt can
                wait up to 6 years to then come after the borrower and demand
                repayment of the deficit

              (b) There can also be a court action – this can result in a judgment,
                  which lasts 20 years

              (c) This can all occur if Short Sale releases Deed of Trust, but not
                  the note w/discharge (make sure this is getting released also).

      ii) Short Sale tax consequences
              (a) Seller will be taxed for deficit as income if
                  (i) Seller’s debt is result of large equity refi and equity wasn’t
                       used to improve property
                  (ii) If home is not owner occupied, then deficit is taxed as
                       income
                  (iii)        Seller will still be taxed on deficit as income even if
                       the deficit has not been forgiven and is still owed (unless
                       forgiven under DR Act)
      iii) Short Sale Credit consequences
              (a) Can reduce score by 75-125 points
                  (i) Vs Foreclosure (300+ point reduction)
              (b) Cannot get FNMA loan for 2 years
                  (i) Vs Foreclosure – 5 years
                  (ii) Vs Deed in Lieu – 4 years
                  (iii)       Vs Bankruptcy – 2-5 years (depending on Chapters)
              (c) FHA – UK

    This document was created by Danielle Groeneweg | Website: www.whatcomcountysearch.com
         Email: dgroeneweg@muljatgroupnorth.com | For more info, please call: 360.483.6490
                 (i) Vs Foreclosure – 3 years
                 (ii) Vs Deed in Lieu – 3 years
             (d) VA – UK
                 (i) Vs Foreclosure – 2 years
                 (ii) Vs Deed in Lieu – 2 years
       iv) General Short Sale Difficulties
             (a) If <1 lien holder, SS can be at least 4 times harder
                 (i) PMI counts as lien holder – must ok the SS (only servicer can
                      get ok from PMI)
             (b) If auction is within couple weeks, SS very difficult (maybe
                 impossible)
             (c) If debt is not house related, SS won’t help (refer client to atty) i.e
                 – medical bills, recent divorce, lost job

2) Short Sale Alternative Info
      i) Deed in Lieu (just give house back to bank)
           (1) Only available if seller has just 1 lien on house
               (a) Lender will step into position of seller, so does not want any
                   other liens to now be held accountable for
           (2) Results in no deficiency (same as non-judicial FC)
               (a) Entire balance owed on FC lien is gone
               (b) Junior liens not discharged if proceeds can’t pay (from re-sale of
                   home)
                   (i) This debt is now unsecured and can be collected from seller
      ii) Foreclosure timeline
           (1) Warning letter => Notice of Default (30 days) => Notice of Sale (30
               days) => Trustees Sale (90 days) => Borrower must vacate (20 days)
      iii) Agricultural land must be Judicial FC
           (1) Under any Judicial FC, seller has 1 year to buy back their
               home/property at the amount the buyer paid for it at the auction +
               nominal interest
           (2) Buyer beware – if buying a Judicially FC’d property, wait at least
               1 year before making any improvements
      iv) Bankruptcy
           (1) If borrower has numerous other unsecured debts
           (2) Large second mortgage with ongoing liability after SS or FC
           (3) Tax debts or other competing complications
           (4) Advise client to talk to a lawyer => if they refuse, have sign
               acknowledgment that you advised atty
      v) DON’TS

    This document was created by Danielle Groeneweg | Website: www.whatcomcountysearch.com
         Email: dgroeneweg@muljatgroupnorth.com | For more info, please call: 360.483.6490
          (1) Do not use retirement accounts to fund home you can’t afford
          (2) Do not pay for mortgage modification – or non-profit debt
              negotiators (this is FREE through the bank)



3) HAFA SS Information
     i) Eligibility
         (1) Home must be principle residence
             (a) Exemption – if borrower home has been vacant for less than 90
                 days and can prove the relocation was over 100 miles and for
                 employment – Note: IF FANNIE MAE, then home MUST NOT
                 be vacant at all during entire short sale process
         (2) Must have current unpaid principle balance on SFR >$729,750
         (3) Only applicable to 1st position loans (borrower may have other
             loans, but the HAFA SS must be processed through first)
         (4) Loan must’ve been originated on or before January 1, 2009
         (5) Monthly payment on 1st mortgage must exceed 31% of gross
             income
         (6) Borrower must have a financial hardship
         (7) Borrower must be delinquent or default reasonably foreseeable
             (a) FNMA requires delinquency of at least 60 days at time of
                 application for HAFA
     ii) HAFA Features
         (1) Short sale terms are preapproved
             (a) USE Alt. RASS if receive offer prior to preapproval
         (2) Specific time lines exist for the servicer to:
             (a) Determine a borrower’s eligibility – servicer must evaluate
                 eligibility within 30 days of receiving RMA form
             (b) Borrower may be offered LM => borrower rejects LM => Servicer
                 determines
                 (i) If short sale meets investor criteria
                 (ii) Property value
                 (iii) List price or MANP
                 (iv) No time line for this step – BOA says 30-60 days
             (c) SSA & RASS (agent must keep) sent to borrower if
                 preapproved
                 (i) Includes list price or MANP
                 (ii) Property must be listed if not already
                 (iii)        SSA returned to servicer


    This document was created by Danielle Groeneweg | Website: www.whatcomcountysearch.com
         Email: dgroeneweg@muljatgroupnorth.com | For more info, please call: 360.483.6490
                           1. within 14 days – including copy of listing and other lien
                               info
                  (d) Marketing
                      (i) 120 days minimum list time (extensions possible up to 12
                           mos)
                  (e) Get an offer
                      (i) Submit RASS, contract, all other info again (including other
                           lien holder info) within 3 business days of MA
                      (ii) Servicer approves or disapproves contract within 10
                           business days
                      (iii)        Closing – servicer cannot require closing sooner than
                           45 days from MA. Seller receives $3,000 relocation assistance
                           and is released of ALL LIABILITY ON ALL LIENS.
              (3) Listing commissions are protected once the SSA has been executed.



***BOA HAFA SS outline***



        1.   Step 1: Call us to request a HAFA short sale and update us on your current financial

             situation. We’ll review your information and check your eligibility for a Home Affordable

             Modification or any other home retention program that would enable you to stay in your

             home.




   2.



             Step 2: If you don’t qualify for a modification and want to sell your home, we’ll work to

             gain approval of your first mortgage HAFA short sale request. If you have a second

             mortgage with another lender, you will have to ask them for approval.




   3.



             Step 3: You will be given time to market and sell your home — typically 120 calendar

             days. You are required to work with a licensed real estate professional.




    This document was created by Danielle Groeneweg | Website: www.whatcomcountysearch.com
         Email: dgroeneweg@muljatgroupnorth.com | For more info, please call: 360.483.6490
4.



     Step 4: Once you receive an offer, you have 3 calendar days to submit a Request for

     Approval of a Short Sale document as well as the offer letter. We’ll get back to you with a

     decision on the offer within 10 business days.




5.



     Step 5: If the offer is accepted, your house is sold and your mortgage and any other

     loans against the home are settled from the proceeds of the sale.




 This document was created by Danielle Groeneweg | Website: www.whatcomcountysearch.com
      Email: dgroeneweg@muljatgroupnorth.com | For more info, please call: 360.483.6490