On June 1, 2010 both Government Sponsored Enterprises (GSEs) announced their guidelines for HAFA (Home Affordable Foreclosure Alternatives). These programs will allow homeowners with GSE loans to pursue a short sale or deed-in-lieu of foreclosure if they are unable to secure a modification under the government’s foreclosure prevention program.
Both programs are almost identical to the Treasury's HAFA program that was effective April 5, 2010 for non-GSE mortgages. Which makes one wonder..... why the big delay?
The borrower must first be evaluated and denied for a Making Home Affordable Program (HAMP) workout plan. The GSE HAFA programs take effect Aug. 1, 2010, but servicers are allowed to use HAFA immediately.
After reviewing the guidelines, here are some minor differences from the Treasury HAFA program:
Servicers are eligible for a $2,200 cash incentive for each completed short sale (it is $1,500 for non-GSE HAFA) and $1,500 for each completed deed-in-lieu.
Freddie Mac Eligibility: 60 days late and have cash reserves less or $5,000 or 3 times their monthly mortgage. Borrowers may be in foreclosure, in pending litigation involving the mortgage, or in active bankruptcy.
In addition, Freddie said it does not require or accept cash contributions or promissory notes from the borrower.
Quick links to GSE HAFA Resources:
- Fannie or Freddie Loan Lookup
- Fannie Mae HAFA Guidelines (website)
- Download HAFA overview_FannieMae (PDF)
- Freddie Mac HAFA Guidelines (website)
- Download HAFA_bulletin_FreddieMac (PDF)
For a breakdown and side-by-side comparison of the key points, read Darren Welsh's blog: TGIF Legal Tip: Fannie and Freddie HAFA Programs
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