Fannie Mae and Freddie Mac Create HAFA Programs
Fannie and Freddie have recently announced that they will be participating in the Home Affordable Foreclosure Alternatives Program (HAFA) beginning in August of 2010. As so many homeowners in this country have their mortgages through these two giants, this makes the possibility of having a short sale open to many more people.
Check here to find out whether your loan is Fannie or Freddie. Here's a quick breakdown of their respective programs.
| Fannie Mae | Freddie Mac | |
|---|---|---|
| Brochure | Fannie HAFA Brochure | Freddie HAFA Brochure |
| Effective Date | Begins August 1, 2010 Expires December 31, 2012 |
Begins August 1, 2010 Expires December 31, 2012 |
| Commission | "We will allow real estate commissions as stated in the listing agreement between you and your broker, not to exceed six percent (6%) of the contract sales price, to be paid from the gross sale proceeds to the listing and selling brokers involved in the transaction. Neither you nor the buyer may receive a commission. Any commission that would otherwise be paid to you or the buyer must be reduced from the commission due on sale. Fees of a third party to negotiate a short sale with the servicer (commonly referred to as “short sale negotiation fees” or “short sale processing fees”) may not be paid from the sales proceeds." | "We will allow to be paid from sale proceeds, real estate commissions of _____ percent of the contract sales price, to be paid to the listing and selling brokers involved in the transaction. Neither you nor the buyer may receive a commission. Any commission that would otherwise be paid to you or the buyer must be reduced from the commission due on sale. [Optional text:] Please note: We have retained a vendor to assist your listing broker with the sale. The vendor and your listing broker will work together on your behalf to facilitate the sale process. [Choose one and delete unnecessary text.] [The vendor will be paid from sale proceeds [$ ________] OR [an amount equal to ____% of the sales price].] OR [The vendor will be paid by us outside of the sales transaction.]" |
| Costs | “You may not charge borrowers any fees for participating in HAFA.” | “Borrowers cannot make cash contributions or promissory note obligations to satisfy either the first lien or subordinate liens.” |
| Deficiency | The mortgage lienholder determines in advance the minimum acceptable net proceeds it will accept as a short payoff in full satisfaction of the total amount due on the first mortgage loan. | Upon completion of the HAFA Short Sale or HAFA Deed-in-Lieu all mortgage debts are extinguished. |
| Borrower Incentives | Short sale or DIL – $3,000 to assist with relocation expenses. | $3,000 will be paid to the borrower to help with relocation expenses after a completed HAFA Short Sale or HAFA Deed-in-Lieu. |
| Subordinate Lien Holder | Not to exceed $6,000 in aggregate. Each lienholder in order of priority may be paid 6% of the unpaid principal balance of its loan, until the $6,000 cap is reached. | Six percent of the outstanding unpaid principal balance of each subordinate lien in order of lien priority, with an aggregate total of $6,000 to all lien holders, will be offered in exchange for releasing their liens and satisfying the underlying debts. |
| Short Sale Docs | Fannie HAFA Short Sale Agreement Defines the terms and conditions of a short sale, including the following:
Defines the terms and conditions of a short sale transaction acceptable to the servicer and, together with the sales contract, provides settlement instructions to the borrower’s settlement agent. HAFA Request for Approval of Short Sale without Short Sale Agreement Must be used when a borrower submits an executed sales contract before the servicer and borrower have entered into a HAFA Short Sale Agreement. |
Freddie HAFA Short Sale Agreement Servicer/borrower agreement that authorizes the borrower to sell the mortgaged property to a third party and have Freddie Mac accept the sale proceeds in full satisfaction of the mortgage. HAFA Approval of Short Sale Must be completed by the Servicer and sent to the borrower when they consent and approve a borrower’s request for approval of a HAFA Short Sale. HAFA Disapproval of Short Sale must be completed by the Servicer and sent to the borrower when they disapprove a borrower’s request for approval of a HAFA Short Sale. |
| Eligibility | "Servicers may not condsider a borrower for HAFA until the borrower has been evaluated for a HAMP modification. Once a borrower has met all of the eligibility criteria for HAMP, the borrower must be considered for a HAFA short sale or DIL if the borrower:
|
60 days late and have cash reserves less or $5,000 or 3 times their monthly mortgage. Borrowers must have first been considered for a Freddie Mac HAMP. Borrowers may be in foreclosure, in pending litigation involving the mortgage, or in active bankruptcy. |
| Credit Reporting | "We will follow standard industry practice and report to the major credit reporting agencies that your mortgage was settled for less than the full payment." | "Servicers must continue to report a 'full-file' status report to the four major credit repositories in accordance with the Fair Credit Reporting Act and credit bureau requirements as provided by the Consumer Data Industry Association (CDIA)." |
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