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 If the Servicer evaluates the Borrower and determines that the Borrower is eligible for a HAFA Short Sale  The Servicer must comply with the following.

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Presentation on theme: " If the Servicer evaluates the Borrower and determines that the Borrower is eligible for a HAFA Short Sale  The Servicer must comply with the following."— Presentation transcript:


2  If the Servicer evaluates the Borrower and determines that the Borrower is eligible for a HAFA Short Sale  The Servicer must comply with the following steps

3  The Servicer is not required to obtain Freddie Mac's prior approval,provided:  Minimum acceptable net proceeds  Allowable Transaction Costs  SSA

4  The Servicer must document the minimum acceptable net proceeds  The Minimum acceptable net proceeds determined by: ▪ Broker's Price Opinion (BPO) or appraisal minus : ▪ (1) the Allowable Transaction Costs ▪ (2) the maximum amount payable to subordinate lien holders ▪ (3) the Borrower relocation incentive paid

5  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  After signing an SSA, the Servicer must not:  Increase the minimum acceptable net proceeds  Decrease the minimum acceptable net proceeds unless authorized by Freddie Mac  Disclose the minimum acceptable net proceeds amount to any party

7  Freddie Mac will pay up to a total of 9% of the final sales price towards  (1) reasonable closing costs paid by a seller.  (2) Real estate brokerage commissions of up to 6% of the final sales price.

8  The SSA outlines the roles and responsibilities of the Servicer and the Borrower in the HAFA Short Sale process.  After the Servicer has performed an evaluation, the Servicer must prepare and send an SSA to the Borrower.

9  The Servicer must also:  Send the Borrower Form 1136,  Request for Approval of Short Sale (RASS)  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  A fixed termination date that is 120 calendar days from the effective date of the SSA  The minimum list price which shall be the 90 day "as is" marketing value

11  The Allowable Transaction Costs which may be deducted from the gross sale proceeds are  (1) the reasonable closing costs  (2) real estate brokerage commissions of up to 6%, for a total of 9% of the final sales price  If the Servicer retains a vendor, the Servicer must indicate this in the SSA.

12  The amount of the monthly mortgage payment the Borrower will pay during the term of the SSA  A closing date that is no less than 45 calendar days from the date of the sales contract

13  The Borrower must sign and return the SSA within 14 days  A copy of the listing agreement  A copy of the multiple listing service ("MLS") listing  Information regarding any subordinate liens.

14  Provide all information and sign documents required to verify HAFA eligibility  Cooperate with the listing broker  Maintain the interior and exterior of the Mortgaged Premises

15  Work to clear any liens or other impediments to title  Make the monthly payment

16  The Servicer must terminate the SSA before its expiration if any of the events in the following slides occur

17  The Borrower's financial situation  The Borrower or the listing broker fails to act in good faith  A significant change occurs to the condition and/or value of the Mortgaged Premises

18  There is evidence of fraud or misrepresentation  The Borrower files for bankruptcy and the court declines to approve the SSA  Litigation is initiated or threatened

19  Note: The Borrower's failure to make monthly payments on the Mortgage is not a cause for termination, unless accompanied by another breach of the SSA.

20  After receipt of the signed SSA from the Borrower, the Servicer must order title work to identify subordinate liens and other claims  There are, of course, exceptions

21  If the Servicer has previously ordered title work  The Servicer must share the title work with the Borrower and/or the listing broker

22  The Servicer may not require the Borrower to pay in advance  However, the Servicer may add the cost to the amount owed under the Mortgage

23  If a HAFA Short Sale or Deed-in-Lieu is completed, the Servicer may request reimbursement of the expense

24  Submitting the RASS to the Servicer  The RASS provides the terms and conditions  Delivering to the Servicer a completed RASS

25  A copy of the executed sales contract and all addenda  Buyer's documentation of funds or buyer's pre- approval or commitment letter  Copies of all documentation indicating that subordinate lien holders have agreed to release their liens and the Borrower from liability  A preliminary HUD-1

26  Two aspects:  Net sale proceeds equal or exceed minimum acceptable net proceeds  Net sale proceeds less than minimum acceptable net proceeds

27  Within ten (10) Business Days of receipt of the RASS, the Servicer must indicate its approval  Determined by the Servicer prior to execution

28  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 ®

29  Enter information related to the Borrower relocation incentive, etc., on the HUD-1 screen of Workout ProspectorHUD-1  In the "Recommendations" section, indicate the following in all caps: HAFA SHORT SALE

30  Send an email to and  In the subject line of the e-mail enter the Freddie Mac loan number and notation "HAFA Short Sale – Approval"

31  HAFA Short Sale  What may not be required

32  The possible closing date.

33  The Servicer may indicate its disapproval of the proposed sale

34  The Servicer must also evaluate the terms of the offer

35  If Borrower has an executed sales contract that would result in a short payoff of the Mortgage.  The Servicer must clearly communicate information to the Borrower

36  The Servicer must process the sales contract in accordance with the requirements of a short payoff

37  A recommendation to Freddie Mac to extend the SSA if  (i) The Borrower has fully complied with the SSA  (ii) The Servicer believes an extension will result in an offer

38  The Servicer must submit a recommendation for an extension no fewer than 15 days prior to the expiration  "Request for Extension of SSA" to  Must also provide recommendations relating to the marketing of the Mortgaged Premises

39  If Freddie Mac approves the extension, must prepare a written extension agreement  The extension agreement must also amend other terms of the SSA  If an extension is not recommended nor approved, must consider the Borrower for a HAFA Deed-in-Lieu

40  Within five Business Days, 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)

41  Proceeds check or wire communication notice  Copy of the final sales contract, including any addenda  Final HUD-1  Proof that subordinate liens have been paid and commitment from the subordinate lien holder(s) to release the lien(s)

42  The Servicer must comply with the reporting and remitting requirements of Closing, reporting and remittance  The Servicer must advance from its own funds

43  Servicers must refer to and comply with the additional requirements of :  Closing,  Reporting and remittance  Remitting additional proceeds and requesting reimbursement for expenses.

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