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THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
Your Guide to Completing a Short Sale
Under the Federal Government’s HAFA Program
03-10-2011
Home Affordable Foreclosure
Alternatives (HAFA)
Short Sale Program
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROGRAM
Guide Revisions
Updates to the HAFA guide are made on a regular basis, so visit the Real
Estate Agent Resource Center (bankofamerica.com/realestateagent) to
download the most recent version.
Guide updates
• Version 2 – released March 10, 2011
– Policy updates (Supplemental Directive 10-18)
– Milestone chart on ARASS (HAFA process with offer already in hand)
– Key actions for agents
2
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA DEFINED
3
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROGRAM
• This federal government program
helps homeowners who:
– Can’t afford their first mortgage.
– Want to avoid foreclosure.
– Have exhausted all modification
attempts and can’t keep their
home.
• The program:
– Allows homeowners to sell their
home through a short sale and
settle mortgage debt.
– Offers financial incentives to
borrowers who successfully
complete a HAFA short sale or
deed in lieu of foreclosure.
• The federal government specifies
aspects of the program, including:
– Customer qualification
requirements.
– The process used by the servicer.
– Decision timeframes.
• Investor participation:
– Fannie Mae and Freddie Mac
implemented their own versions
of HAFA in 2010.
– FHA, VA and Ginnie Mae loans
are not yet covered by a HAFA-
type program.
4
Home Affordable Foreclosure Alternatives (HAFA)
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROGRAM
Homeowner Benefits of HAFA Program
Compared to traditional short sale process:
• Quickest option for a short sale decision when there is no offer.– Faster decisions: in 10 days once an offer is submitted.
– A lender-recommended list price is provided before listing the home.
• Deficiency is waived.– The mortgage debt will be settled through the program.
– No legal action can be taken on/against the outstanding mortgage debt.
• $3,000 at closing for relocation assistance.
• No cash contribution or promissory note required to release any lien.
• Foreclosure process put on hold.
When should homeowners consider the HAFA program?
• During initial discussions of alternative foreclosure options.
• Even after a short sale offer is received.
5
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROGRAM
Requirements for HAFA Eligibility*
• The homeowner has:
– Exhausted all modification options, and/or
– Decided to pursue a short sale or deed in lieu of foreclosure.
• The property is the homeowner’s primary residence.
• The mortgage:
– Originated on or before Jan. 1, 2009 (for the 1st lien).
– Is delinquent or default is reasonably foreseeable.
• The homeowner must contact us to determine the likelihood of default.
– Has an unpaid principal balance less than $729,750 for 1-unit properties.
• Higher balances are available for 2-4 unit properties.
• No properties with more than 4 units allowed.
6
* HAFA eligibility doesn’t represent being qualified as investor determines.
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
ENHANCEMENTS – 10-18 UPDATES
7
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROGRAM
HAFA 10-18 Enhancements
• Supplemental Directive 10-18 has reduced eligibility requirements so more borrowers may qualify.
• Major eligibility improvements include:– Eliminated the requirement to verify borrower’s financial information,
including debt-to-income (DTI) ratio.
– Property can be vacant or rented up to 12 months prior to the Short Sale Agreement (SSA), as long as the borrower can prove the property was the primary residence and has not purchased another home in the last 12 months prior to SSA.
• Relocation no longer has to be work-related, nor is there a minimum distance requirement.
– Payment to 2nd lien holders up to $6,000 remains, but the 6% requirement is eliminated.
– Agent commissions:• Are not deducted from 3rd party vendor fees.
• Will be stated in the Short Sale Agreement.
• Download Supplemental Directive 10-18 for more details.
8
For more information about policy updates,
see: HAFA 10-18 Enhancements
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
INVESTOR PARTICIPATION
9
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROGRAM
• The borrower’s first mortgage loan must be
owned by an investor participating in
HAFA.
– Fannie and Freddie loans have their own
version of HAFA with different
requirements and are not participating in
Supplemental Directive 10-18.
• Subordinate mortgage/lien holders must
agree to release the liens.
– The borrower and agent are responsible for
identifying all liens and obtaining their
release.
– Lien payoffs for each junior lien holder are
up to $6,000 and determined by servicer.
• Participation in HAFA is on a loan-by-loan
basis, not an investor-by-investor basis.
– An investor may participate in HAFA on
some loans and not on others.
• The amount of financial documentation
required is up to the individual investor or
mortgage insurer.
• Agent commissions will be documented
and agreed upon in the Short Sale
Agreement.
– Most investors support a 6% commission
for a HAFA short sale.
– 3rd party vendor fees are not deducted from
agent commissions.
• Borrowers should call Customer Service at
1.800.669.6607 to find out which investor
is involved.
– Bank of America Home Loans is authorized
to release investor names only to
customers, not to 3rd parties.
10
HAFA Investor Participation
Take investor considerations into account to determine if homeowners can pursue a HAFA sale.
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
OFFER VS. NO OFFER
11
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA COMPARED TO TRADITIONAL SHORT SALE
12
Traditional Short Sale HAFA Short Sale
General QualificationsSee Treasury guidelines for
full HAFA details
Each customer situation is considered
separately by investors
• Participating investors only
• Unpaid principal balance < $729,750* (1 unit)
• Primary residence (property can be vacant/rented <12 months prior
to Short Sale Agreement)
• 1st lien mortgage originated on or before Jan. 1, 2009
• Completed documentation per Treasury
*Higher balances apply to 2-4 unit properties.
Initiate Process When you receive a valid offer • Prior to marketing the property – no offer
• HAFA is also available upon receipt of a valid offer
Timeline for Decisions The offer starts the process, and a number of
steps need to be completed prior to decision:
• Offer/Call
• Collect documents
• Payoff & internal analysis
• Investor review
• Decision
Prior to the marketing phase:
• Qualified for HAFA participation
• Collect documents
• Payoff & internal analysis
• Investor/insurer review
Once an offer has been submitted, you will receive a decision within
10 business days if initiated prior to offer.
Cash/Promissory Note The investor/insurer may require No
Deficiency Pursued The investor may retain the right No
Foreclosure Holds Varies by investor – requires investor approval
Policies subject to change
Auto hold once Short Sale Agreement is executed
Credit Impact Typically less than foreclosure — deficiency
charge-off will be reported to credit bureaus
Typically less than foreclosure — deficiency charge off will be
reported to credit bureaus
Recommended List
Price Provided
No Yes
Approval/Closure Rates Low-medium High after qualification
Relocation Assistance None $3,000
Unrealized Short Sale Optional Deed in Lieu of Foreclosure Automatic HAFA Deed in Lieu of Foreclosure; relocation assistance
included (Request for exceptions will be considered if deal is imminent)
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROCESS MILESTONES ―RASS - NO OFFER‖
13
Customer Care
1.866.880.1232 Monday – Friday8 a.m. – 11 p.m. EST
Saturday
9 a.m. – 5:30 p.m. EST
Inform the
Borrower
Qualification
& Home
Valuation
Program
Agreement
120-Day
Marketing
Program
Offer
ReceivedClosing
Homeowner
• HAFA solicitation
letter received
• Acknowledge
interest of program
within 14 days
OR
• Call to inquire
about HAFA
• Return requested
qualification
documents within 10
days*
• Work with vendor to
schedule home
valuation
• Engage real estate
agent (if not already)
• Receive and return
Short Sale
Agreement (SSA)
• Show and maintain
home
• Work with agent to
negotiate release of
other liens (if not
serviced by Bank of
America)
• Submit Request for
Approval of Short
Sale (RASS) and
other documents, if
applicable
• $3,000 relocation
assistance
(paid after closing)
Agent
• Explain HAFA
benefits to
homeowner
• Inform homeowner
to acknowledge
interest in program
ASAP
• Ensure homeowner
returned completed
requested documents
within 10 days*
• Work with homeowner
to schedule home
valuation
• Sign Short Sale
Agreement (SSA)
• ―Accept‖ assignment
in Equator
• List home
• Perform 21-day
check-ins on
marketing activity
and home condition
• Work with
homeowner to
negotiate release of
other liens (if not
serviced by Bank of
America)
• Submit offer and
remaining
documentation
• If offer needs to be
negotiated, respond
• Notify post approval
deal changes or
closing delays as
necessary
• Give 72 hours notice
prior to closing
• Send required
documents to lender
Bank
of America
• Send HAFA
solicitation letter
• Confirm HAFA
eligibility has been
met
• Initiate file in
Equator
• Send document
request to homeowner
• Order home valuation
to develop a
recommended list
price
• Prepare and deliver
Short Sale
Agreement to
homeowner
• Enter into Equator
the agent noted on
Short Sale
Agreement
• Perform 21-day
check-ins on
marketing activity
and home condition
• Respond to offer
within 10 business
days
• Manage post-
approval changes
• Work with agent and
title company to
enable closing
* Number of days depends on investor. Non-GSEs require 10 days per Supplemental Directive 10-18; however Fannie and Freddie require 14 days.
Under HAFA, if the customer does not receive an offer in the 120-day marketing period, they will automatically proceed to Deed-in-Lieu of Foreclosure per the
Short Sale Agreement and Treasury guidelines.
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE PROCESS MILESTONES ―ARASS - VALID OFFER‖
* All Traditional Short Sales initiated will be reviewed for HAFA eligibility.
HAFA ARASS (offer already submitted) timeline and milestones are different due to already being initiated.
14
Customer Care
1.866.880.1232 Monday – Friday
8 a.m. – 11 p.m. EST
Saturday
9 a.m. – 5:30 p.m. EST
InitiateOffer Submit
and Documents
Obtain
Valuation &
Internal Info
Analyze
Offer
Investor
DecisionClosing
Homeowner
• Call Short Sale
Customer Care
about HAFA
program
• Provide documents to
agent (recommended) or
call Customer Care to
access homeowner portal
• Acknowledge interest of
HAFA program within 14
days
• Submit Alternative
Request for Approval of
Short Sale (ARASS)
• Enable vendor to
schedule home
valuation
• $3,000 relocation
assistance
(paid after closing)
Agent
• Create a FREE
account at
www.equator.com
• Initiate short sale
directly through
www.equator.com
• Submit short sale offer and
supporting documents
• Begin offer negotiation and
release of additional liens
if not serviced by Bank of
America
• Enable vendor to
schedule home
valuation
• Respond if initial
offer needs to be
negotiated
• Adjust closing date
during any counter
offers
• Work with
homeowner and
buyer if investors
stipulate changes to
the deal
• Notify Bank of
America of any post-
approval deal
changes or closing
delays
• Notify Bank of
America within 72
hours prior to closing
• Send funds and
documents
Bank
of America
• Review HAFA
eligibility*
• Review 3rd party
authorization
• Validate offer and
supporting documents
• If homeowner is eligible,
begin outreach to
homeowner to determine
interest
• Order home
valuation
• Order additional
internal information
• Analyze collected
information and
negotiate offer to be
presented to
investors
• Submit offer to
mortgage insurer
and investors as
needed
• Receive approval,
decline or
re-negotiation
stipulations per the
investor decision
• Notify agent and
customer of final
decision from
investor
• Manage post-
approval changes
• Work with agent
and title company
to enable closing
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
TIMELINE ON SHORT SALE DECISION
• HAFA short sale program is most beneficial for homeowners when started early – prior to marketing and offer.
• If the homeowner already has an offer, they may still qualify for HAFA; however, the process can take longer.
– If homeowner is eligible for HAFA program, you will be notified in Equator once you initiate the short sale.
15
When You
DON’T Have
an Offer (HAFA)
1 2 3 4 5
Contact
Bank of
America
Qualification
& Home
Valuation
Program
Agreement
120-Day
Marketing
Begins
Offer
ReceivedDecision
in 10 Days!
When You
DO Have
an Offer (Traditional
Short Sale)
1 2 3 4 5
Initiate
Short Sale
Submit
Offer &
Docs
Obtain
Valuation &
Internal
Information
Analyze
Offer
Investor
DecisionDecision
DECISION TO SELL HOME OFFER
Steps in the
Process
For more information, see:
Changes to Short Sale Initiation Process
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
EQUATOR INITIATION – NO OFFER
16
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE EQUATOR
HAFA Equator Process – “No Offer”
• HAFA short sale is initiated in Equator by the Negotiator.
• The Short Sale Agreement (SSA) will be sent to homeowner for
homeowner and agent to sign and return to Bank of America.
• Once signed SSA is received, the selected agent will be assigned in
Equator by the Negotiator.
• Agent will ―Accept‖ the assignment in Equator.
• Properties and tasks will appear as agent would see them in a traditional
short sale; however, they will be designated ―BAC HAFA.‖
17
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
HAFA SHORT SALE EQUATOR
• There is no ―Submit Short Sale Offer‖ task assigned to the agent in
HAFA.
• To submit an offer:
– Click on ―Place A New Offer‖ under the ―My Properties & Offers‖ section.
– Select the property for which there is an offer.
• The same page as the ―Submit Short Sale Offer‖ task will open. This is the same
page as the traditional short sale offer.
18
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
3 KEY ACTIONS FOR AGENTS
19
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
THREE ACTIONS FOR REAL ESTATE AGENTS
20
1Engage Homeowners Early
Find out if the homeowner owes more than the home’s value.
Discuss short sale opportunities during initial conversations with the homeowner.
Explain the short sale process and how it can help avoid foreclosure.
2Contact Bank of America Before the Home Is Listed
Ask the homeowner to call Customer Care at 1.866.880.1232 to discuss short
sale options.
The homeowner will have to independently acknowledge willingness if eligible for HAFA
short sale program.
3Complete Required Tasks on Time
Provide all necessary documents as soon as possible to keep the process moving
forward.
Make sure all agent and homeowner tasks are completed in Equator on time.
Communicate with your negotiator to reduce unnecessary delays.
THIS INFORMATION IS NOT INTENDED NOR AUTHORIZED FOR CONSUMER DISTRIBUTION.
Bank of America: Proprietary.
© 2011 Bank of America Corporation
Go to: HAFA Defined Enhancements Investor Participation Offer vs. No Offer Equator Initiation Key Actions for Agents
Additional information may be found at:
Real Estate Agent Resource Centerbankofamerica.com/realestateagent
Equatorwww.equator.com
Bank of America Real Estate Centerrealestatecenter.bankofamerica.com
Bank of America Home Loan Assistancebankofamerica.com/homeloanhelp
Dedicated Short Sale Customer Care 1.866.880.1232
COMMITMENT TO CONTINUED IMPROVEMENT
21
Bank of America clearly recognizes the need for continued
improvement in the short sale process and is committed to
identifying new ways to make the experience transparent and
efficient.
We have instituted several new approaches
that are helping to reduce processing times.
• Enhanced our technology; monthly upgrades
ongoing.
• Right-sized staff to meet service level
expectations; dedicated team of short
sale professionals.
• Ongoing collection of feedback on process,
people and technology.
• Resources for short sale education.