Bank of America is sending out emails confirming that they are participating in the HAFA program, and linking to the N.A.R. description:
- $3,000 for borrower relocation assistance;
- $1,500 for servicers to cover administrative and processing costs;
- Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
Here is the link that provides the details about going from HAMP to HAFA:
The Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid costly foreclosures and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid foreclosures. HAFA alternatives are available to all HAMP-eligible borrowers who: 1) do not qualify for a Trial Period Plan; 2) do not successfully complete a Trial Period Plan; 3) miss at least two consecutive payment during a HAMP modification; or, 4) request a short sale or deed-in-lieu.
In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage. Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer – provided title is free and clear of mortgages, liens and encumbrances. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.
HAFA simplifies and streamlines the short sale and DIL process by providing a standard process flow, minimum performance timeframes and standard documentation.
HAFA is all well and good in areas around the country where Fannie/Freddie loans prevail. We’re on the lookout for any sign that major lenders/servicers are fully releasing borrowers from future liability on non-Fannie/Freddie loans. It may take a while before it filters down, because borrowers have to apply for a HAMP first, and then HAFA. If anyone hears about a policy authorizing full release of a non-Fannie/Freddie deficiency, or pre-approved short sale, let’s us know! Our BofA rep said last week it will depend on the investor, but if you have to process the whole package just to find out, and the answer is no release, who cares – nothing has changed.