1. Module 2: US Treasury’s HAFA Program Home Affordable Foreclosure Alternatives 13 2-1

2. Supplemental Directive 09-09R Nov. 30, 2009 HAFA introduced April 5, 2010 Effective date HAMP servicers must participate in HAFA Revised March 26, 2010 13 2-2

3. Supplemental Directive 10-18 Issued Dec.28,2010 Effective Feb. 1, 2011 Made significant changes 13 2-3

4. HAFA Short Sale Deed-in-Lieu 13 Home Affordable Foreclosure Alternatives 2-4

5. HAFA Eligibility = HAMP Eligibility Personal residence, 1-4 family $729,750 balance (SFR) 1 st position loans Originated on or before 1-1-09 Payment on 1 st loan exceeds 31% of gross income Hardship Delinquent or default reasonably foreseeable 14 2-5 (Deleted by SD 10-18)

6. HAFA Features Pre-approved short sale Specified time lines Commissions protected Full release of liability on 1 st and subordinate loans Foreclosure sale suspension 15 2-6

7. HAFA Features (cont’d.) Payment forbearance or reduction $3,000 to Seller Servicer incentives Up to $6,000 for subordinate lien holders Investor reimbursement for subordinate lien releases 16 2-7

8. Who’s Participating All servicers in HAMP –1 st mortgages –Servicers establish policies based on investor guidelines –Investors in non-GSE loans may not approve HAFA short sales 16 2-8

9. Who’s Participating (cont’d.) Fannie & Freddie –Are the investors –Establish separate guidelines 16 2-9

10. Borrower Solicitation Borrowers solicited if delinquent 14 days to respond 16 2-10

11. Foreclosure Suspension Potentially eligible borrowers must be considered for HAFA: –Prior to commencing foreclosure –Before foreclosure sale is conducted For non-GSE loans: Pursuant to servicer’s policy 17 2-11

12. Foreclosure Suspension (Cont’d.) Fannie & Freddie –Special permission required if foreclosure sale is sooner than 60 days 17 2-12

13. Foreclosure Sale is Suspended While determining eligibility During SSA term Pending RASS approval Prior to closing Troubled borrowers should start HAFA process early 17 2-13

14. Borrower Already in HAMP Servicer Must Consider Borrower for HAFA …Servicer Must Consider Borrower for HAFA … Within 30 days from date the borrower: –Does not qualify for trial modification –Does not complete trial modification –Is delinquent on modification –Requests a Short Sale 17 2-14

15. Borrower Not in HAMP Servicer must consider borrower within 30 days from date the borrower: –Requests a Short Sale 18 2-15

16. If Borrower Not in HAMP Servicer determines eligibility –RMA (Request for Modification & Affidavit) 18 Borrower cannot be applying for modification while pursuing a short sale or vice versa. 2-16

17. Bankruptcy? Considered for HAFA if requested 18 2-17

18. RMA Request for Modification and Affidavit 19 2-18 Wells Fargo calls it a RFAA

19. RMA Pg. 1 For HAFA: Sell property Primary residence Owner occupied Explain Hardship Other liens 19 2-19

20. RMA Pg. 2 Income: Must include all except alimony, child support and/or separate maintenance payment Assets: Do not include life insurance or retirement accounts 20 2-20

21. Paragraph 5 is for modifications RMA Pg. 3 Use servicer’s form which servicer should have modified for short sale 21 2-21

22. HAFA Short Sale Flow Chart Determine if Seller/Borrower meets HAFA eligibility. Servicer has 30 days to determine eligibility, and issue or deny the SSA. Borrower requests short sale & submits complete package including RMA SSA & RASS sent to borrower. Includes list price or Minimum Net Proceeds SSA returned to servicer: Within 14 days Copy of listing Other lien info Marketing: 120 days minimum Extensions possible, up to 12 months total Upon Contract to Purchase: Submit RASS & contract within 3 Biz days of contract acceptance Servicer approves or disapproves contract within 10 Biz Days Closing. Servicer cannot require closing sooner than 45 days from contract acceptance. Seller receives $3,000 relocation assistance & is released from all liability on all liens. 22 Property must be listed 2-22

23. Determine Seller’s Eligibility Principal residence 1 st mortgage originated on or before 1-1-09 Delinquent or default reasonably foreseeable Unpaid balance $729,750 or less Financial hardship Step 1 23 2-23

24. Principal Residence Exemption: Vacant or rented to a non-borrower up to 12 months prior to issuance of: –SSA or –Alt RASS and Borrower has not purchased another home during 12 months prior to issuance of SSA 23 2-24

25. 1 st Position/Pre 2009 Eligibility based on 1 st loan balance & payments Originated on or before Jan. 1, 2009 23 2-25

26. Delinquent or Default Foreseeable Delinquent Delinquent – more than 60 days late Imminent default evaluated by servicer based on borrower’s debts, expenses, income & assets Imminent default evaluated by servicer based on borrower’s debts, expenses, income & assets 23 2-26

27. Maximum Unpaid Balance 1 Unit: $729,750 2 Units: $934,200 3 Units: $1,129,250 4 Units: $1,403,400 24 2-27

28. Financial Hardship Reduction/loss of income Reduction/loss of income Financial circumstances change Financial circumstances change Increase in payment Increase in payment Increased expenses Increased expenses No cash reserves No cash reserves Excessive debt Excessive debt Other reasons Other reasons 24-25 2-28

29. Financial Information & Payment/Income Rati o Financial info may be required by servicer Financial info may be required by servicer Treasury HAFA: Payment not required to exceed 31% of borrower’s income for non-GSE loans Treasury HAFA: Payment not required to exceed 31% of borrower’s income for non-GSE loans Fannie & Freddie require payment to exceed 31% of gross income Fannie & Freddie require payment to exceed 31% of gross income 24-25 2-29

30. Request Short Sale Servicer’s forms –Use servicer’s forms –Complete all forms Complete RMA IRS Form 4506T List of servicers at: www.MakingHomeAffordable.gov www.MakingHomeAffordable.gov 25 Step 2 2-30

31. Servicer Evaluation Compares Foreclosure/REO proceeds to Short Sale proceeds based on investor requirements Denial –Not eligible –Does not meet investor criteria –Reasons explained 25 Step 3 2-31

32. Issuance/Denial of SSA 30 calendar days from receipt of documents and borrower’s request for HAFA short sale consideration 26 Step 3 2-32

33. SSA & RASS Issued SSA: Short Sale Agreement –Offers borrower pre-approved short sale –14 days to accept & return Property must be listed RASS: Request for Approval of Short Sale –Kept until seller accepts a buyer’s offer 26-27 Step 4 2-33

34. Listing the Home Required when SSA returned Licensee must sign SSA Copy returned with SSA 26 2-34

35. SSA List Price or Minimum Net Servicer sets: –List price or –Minimum net proceeds No increase in minimum net during term of SSA Are terms realistic??? 27 2-35

36. Marketing 120 days minimum Extensions possible for up to 12 months total 27 Step 5 2-36

37. RASS & Purchase Agreement Contract & Addenda RASS Buyer –Proof of funds or pre-approval letter Subordinate lien info 3 Biz Days to submit to servicer 27-28 Step 6 2-37

38. Approval or Disapproval 10 Biz days Approval required if minimums are met Cannot require commission reduction 28 Step 7 2-38

39. Closing Can be ASAP Servicer cannot require sooner than 45 days 45 days begins at contract acceptance 28 Step 8 2-39