I have a short sale with Wells Fargo.  First and second - both are with WF.  We submitted a "traditional" short sale package about a month ago.  My clients asked me on Wednesday (April 7th) about HAFA - would they qualify and be guaranteed no deficiency?  Well, I called up WF and asked them. 

I was told that I would need the homeowner to call in and request to be put through HAFA, at which point, my current short sale file would be canceled out.  Then, they would first be qualified for a loan modification through HAMP. My clients have attempted a loan mod for 15 months prior to listing it for a short sale - via this program and that program, however the bank can't tell us if one of the programs they were previously disqualified for was HAMP.  So, they'd need to try again.

The timelines for HAMP were up in the air.  WF told me it could be up to 90 days just to see if they qualify for HAMP.  If they don't, or if they do but don't accept the loan mod, then they will be put through the HAFA program.  If they don't qualify for that, they will be put back into the regular short sale program that we're in now....just with a whole lotta lost time.

Then she said that she wasn't sure if their investor was participating in HAFA.  "Oh really?  You don't have something on your screen that tells you if this investor participates?" 

Her response:  "No ma'am.  The only way to tell if the investor participates in HAFA is to apply for it.  You'd need to cancel your current short sale and then resubmit.  Then we can tell you if the investor is participating or not."

AGGGGHHHHHHHH!!!!!!!!!!!!!!  Welcome to HAFA :)

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Replies to This Discussion

Actually your WF person was wrong on HAFA qualifications. One does not have to go through HAMP. A seller can request a short sale right off the bat. Review the HAFA guidelines and you will see this in addition to the other items.

Personally if you have a short sale in process it makes no sense to switch to HAFA (IMHO). Between investor and seconday lien fallout it would probably not come together anyway.
According to our in-house attorney and from what we've read from NAR, it appears that the borrower must be considered for HAMP prior to being considered for HAFA. If a borrower requests HAFA off the bat, the servicer must first run them through HAMP - even if the borrower doesn't want to keep the house. They must offer them the modification if they qualify for it. NAR's publications states as follows:

Servicers must consider HAMP-eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:
o Does not qualify for a HAMP trial period plan.
o Does not successfully complete a HAMP trial period plan.
o Is delinquent on a HAMP modification (misses at least 2 consecutive payments).

I do agree that there is a lot of confusion on HAFA - and in my office, we have all come to the conclusion that we can interpret the guidelines all we want to, but ultimately the servicers are going to have their own interpretation and implement accordingly. In sum, it is going to be a trial and error kind of thing, as is just about everything in real estate.

And I do agree - the investor and the second would likely ruin my sellers' chances anyway. Fortunately, my seller thinks so too and we are carrying on with our "traditional" short sale.
What is missing from the NAR quote is the fourth item for consideration:

"Requests a short sale or DIL."

This is from page 4 of the rivised directive HAFA dated 3/26/2010.

Laurel Starks said:
According to our in-house attorney and from what we've read from NAR, it appears that the borrower must be considered for HAMP prior to being considered for HAFA. If a borrower requests HAFA off the bat, the servicer must first run them through HAMP - even if the borrower doesn't want to keep the house. They must offer them the modification if they qualify for it. NAR's publications states as follows:

Servicers must consider HAMP-eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:
o Does not qualify for a HAMP trial period plan.
o Does not successfully complete a HAMP trial period plan.
o Is delinquent on a HAMP modification (misses at least 2 consecutive payments).

I do agree that there is a lot of confusion on HAFA - and in my office, we have all come to the conclusion that we can interpret the guidelines all we want to, but ultimately the servicers are going to have their own interpretation and implement accordingly. In sum, it is going to be a trial and error kind of thing, as is just about everything in real estate.

And I do agree - the investor and the second would likely ruin my sellers' chances anyway. Fortunately, my seller thinks so too and we are carrying on with our "traditional" short sale.
Yup. Steele is absolutely correct. The seller can go straight to the short sale or DIL option without dealing with HAMP first. The problem is that lenders are not up to speed with the HAFA guidelines yet. And of course the longer they delay making a decision the more servicing fees they make.
Ah yes......turn the page and there's the "Requests S/S or DIL". Details, details.........geesh! ;)
However, they have already agreed to abide by these guidelines. They don't get to pick and choose certain ones. And most of the major lenders are signed on to the program.

The problem lies in the fact that investors, MI companies and secondary liens are not bound by the guidelines. If they say "no" it doesn't matter if the lender has agreed to follow them. In those situations we are at the mercy of these other parties.

HAFA fits a very limited group of loans/lenders. One expert I heard the other day said, maybe 10-30% would qualify. And the reason for the spread is that some secondary lenders might be fine with using the HAFA program. And others will put the kabosh on it right away.

The "good" news is that most of our lenders have other short sale programs available. The ones we were already using.

Armi Abiera said:
It also says that these are "guidelines" and its up to the bank how they want to implement the program, leaving too much room for their own interpretation.
Our attorney maintains that if a borrower requests a s/s, the servicer will qualify them for HAMP and borrower will get 14 days to accept a mod (if approved). I dunno......again, I think we can interpret all we want to, but servicers are going to have their own interpretations - such as in the WF experience I had. Which, btw, I called them just now to speak to a different rep. I was told the exact same thing as the first one told me. Ultimately, we'll have to wait and see how it plays out in the real world.

And yes, it is important to note that the servicer "participating" is only half the story. It's up to the investor. That's where I see a lot of confusion - people say "Bank of America said they are participating." Well good for them, but unless they own the note, the investor can, as you said, put the kabosh on it.

All in all, I don't see HAFA being the panacea that it's cracked up to be.
I think that anyone who sees this as a "be all,end all" is blindly optomistic. This is just one tool in the shed so to speak.

But it has drawn major attention to short sales and with BOA ramping up their short sale department I do see good things even if indirect.

If a regular short sale is available, I would seriously consider it. Unless you are dead sure the situation will fit HAFA perfectly (ie. one loan, servicer is also lender, etc.)
Steele...

You are the first person or place I have heard this from- thanks.... I have a client who I think might qualify for HAFA because his payment exceeds 31% of income. However, everything I have read says he will need to qualify for HAMP first. Can you tell me how you started? I mean did you go to the lender before listing the property? Did you just have your client call and ask 'how do i participate in HAFA?" any help greatly appreciated...

Thanks

Steele V. Propp said:
Actually your WF person was wrong on HAFA qualifications. One does not have to go through HAMP. A seller can request a short sale right off the bat. Review the HAFA guidelines and you will see this in addition to the other items.

Personally if you have a short sale in process it makes no sense to switch to HAFA (IMHO). Between investor and seconday lien fallout it would probably not come together anyway.
I agree with you except for the new HAFA program allows for $3K to borrower to move out, no promissory note and not DJ.
Wouldn't it be better to try to get into the new program than risk the DJ after th short sale? Although, even with a foreclosure, a DJ can still be hanging over their heads.
KS

Steele V. Propp said:
I think that anyone who sees this as a "be all,end all" is blindly optomistic. This is just one tool in the shed so to speak.

But it has drawn major attention to short sales and with BOA ramping up their short sale department I do see good things even if indirect.

If a regular short sale is available, I would seriously consider it. Unless you are dead sure the situation will fit HAFA perfectly (ie. one loan, servicer is also lender, etc.)
I understood HAFA only applies to the first lien. How do you clear the second?
According to the HAFA Program Directive you can submit an ALT Request for Short Sale (RASS) Form on a property you have not already submitted for participation. You can find a copy of this form on my site at http://columbusrealestatenews.featuredblog.com/?p=649 . The problem I'm finding is that most of the lenders aren't hitting the ground running with this program and have done little to train or prepare their employees on it's policies.

Jason Opland
Obvious Choice Realty || The Opland Group
614.408.8078 o
[email protected]

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