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Anne Weintraub Perspectives Residential Real Estate Closings

Have H.A.F.A.?

It was billed as an exciting new government program to assist homeowners who did not qualify for loan modifications under the Obama administration’s HAMP program. Under the Home Affordable Foreclosure Alternatives Program, or HAFA, a borrower could qualify for a short sale by submitting a HAFA application to their lender to receive a pre-approved listing price within 10 days. With the pre-approved price, the borrower would receive total forgiveness of the note on the first mortgage AND the second mortgage, with an additional $3,000 in relocation expenses as an incentive.

But, what is HAFA in reality? Well, it depends on who your servicer is. The bank that is the servicer or “face” of your loan is the one who calls consistently for payment and sends your statements. It also depends on who the owner of your loan is. I like to bill it “the Wizard of Oz,” but the proper terminology for the bank that owns your loan is your investor. In any event, if you have a servicer and investor who owns your loan and does participate in HAFA, you may be in luck–or not.

So far, I have seen very few HAFA approvals issued by my clients’ servicers. Out of all of my HAFA cases, it appears the best responses have been from Aurora, Chase, and Wells Fargo. These servicers appear to have successfully implemented the program. Other servicers have not delivered results so far. For example, it appears Bank of America has outsourced its HAFA program to sub-vendors. The sub-vendors, such as Prommis, UTLS, and Loan Resolution Company, are supposed to collect the homeowner’s HAFA application and then send it back to Bank of America for underwriting approval. So far, only one of my clients has actually closed with a BOA HAFA approval; in that case, the sub-vendor was Prommis. That approval was not issued without a struggle. It took months and numerous emails and complaints to supervisors and their employees. I would equate obtaining that particular approval to a mental jello wrestling match–interpret as you wish.

My point is that even though the program is a good start, it is not where it needs to be. Any assistance program for homeowners–government or not–must be transparent to the homeowners and all parties assisting them, including the attorney and realtors. Every servicer should post the HAFA guidelines for each investor on their web site so homeowners are not surprised if they are denied. For example, most homeowners do not know that if their investor is Freddie Mac, they cannot participate in the HAFA program if there is an existing offer on the property. By posting this information on their sites, servicers can prevent shock among homeowners and increase the amount of HAFA approvals.

HAFA is not a right–it is only a program. There is no law mandating that servicers and investors participate. In fact, the government incentives are so low that most servicers find participation in the program to be politically correct but probably not as profitable as the fees they receive if the homeowner is in foreclosure.

If you are a homeowner who wants to participate in HAFA, call your servicer BEFORE you list the property so you have plenty of time to learn about the program as it relates–if at all–to you. Some servicers do not even participate in HAFA, so it’s important to eliminate it as on option early to avoid unnecessary delay of your short sale. Be sure to call your servicer to inquire, and provide them with your loan number. The loan number will reveal who your investor is and what you should know about their HAFA requirements. It is also a good idea to call back and repeat the question to multiple customer service representatives to insure consistent answers. For more information, visit makinghomeaffordable.gov.

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Anne L. Weintraub is the driving force behind Anne Weintraub, P.A. practicing in Residential Real Estate Closing, Issuance of Title Insurance & Title Services, Refinancing, Contracts & Deeds and Short Sales & Alternatives. Her practice covers Sarasota, Bradenton, Lakewood Ranch, University Parkway, Casey Key, Siesta Key, Bird Key, Longboat Key, Lido Key and Downtown Sarasota.

Anne Weintraub, P.A. is located at 1800 Second Avenue, Suite 882, in Sarasota. You may reach Anne via email at aweintraub@anneweintraub.com or via phone at (941) 685-4300.