Pursuant to the new guidelines released December 28, 2010, servicers are expected to put into place the revised guidelines on or before February 1, 2011. As a part of the updated guidelines servicers are now required to complete and send a Short Sale Agreement (SSA) to the borrower within 30 calendar days from the date the borrower responds to the HAFA solicitation. If the borrower requests HAFA consideration, the servicer must respond within 30 days.
Another major change under the revision is the removal of the HAFA requirement that the borrower must occupy the home. Now, a borrower who no longer lives in the property is eligible for HAFA as long as the property has been vacant or rented to a non-borrower for no more than 12 months prior to the date of the SSA and the borrower has not purchased a new property during the 12 month period prior to the SSA.
Servicers are no longer required to verify a borrower’s financial information to determine a borrower’s HAFA eligibility, nor is it necessary to determine if the borrower’s total monthly mortgage payment is more than 31 percent of monthly gross income. Servicers are also are no longer limited by the 6 percent cap with respect to payments to the subordinate lien holders.
While the above mentioned revision to the HAFA guidelines are in the right direction, the revisions to HAFA do not apply to first lien mortgages that are owned or guaranteed by Fannie Mae, Freddie Mac, or insured by a federal agency such as the Federal Housing Administration. Moreover, servicers are not required to implement the new rules to any loans retroactively.
Joshua D. Carlson, Esq.