Posted on Wednesday, March 24, 2010
On March 12, 2010, the Treasury Department posted Frequently Asked Questions (FAQs) and two revised forms for the Home Affordable Foreclosure Alternatives Program (HAFA). HAFA takes effect on April 5, 2010, but servicers may implement early (apparently none have done so, to date).
1. Of particular interest to REALTORS®, Q4000 changes the way short sale negotiators/vendors hired by the servicer are to be paid. Instead of being paid from the real estate commission, they will instead be paid from the sales proceeds or by the servicer outside of the sales transaction—a significant improvement.
But this change comes at a potentially significant cost. The November 30, 2009, version of the Short Sale Agreement stated that the commission in the listing agreement (up to 6%) would be paid for a HAFA short sale, but would be reduced by an amount determined by the servicer to pay the negotiator/vendor. Treasury changed this approach in the new FAQs and revised forms to allow the servicer to insert in the Short Sale Agreement what it believes to be the reasonable and customary amount of the real estate commission, instead of the amount in the listing agreement. This is an improvement over the current, pre-HAFA situation, since the amount of the commission will be known up front and the real estate broker can attempt to negotiate it as a condition for taking the listing and signing the Short Sale Agreement.
2. Q2000 permits a property to be vacant up to 90 days before the date of the Short Sale Agreement or Alternative Request for Approval of Short Sale, but only if the borrower/seller documents they were required to relocate at least 100 miles from their home for purposes of employment and they have not purchased another property in the 90 day period.
3. Q3000 provides guidance on documentation that servicers may require to ensure that junior lien holders will release their lien and the borrower from personal liability in exchange for an incentive payment of 3 percent of their outstanding loan amount.
4. Q3001 clarifies that junior lien holder may not seek additional contributions from the real estate agent or the borrower/seller in exchange for releasing the lien and the borrower from personal liability.
Announcement of HAFA Changes
Supplemental Documentation—Frequently Asked Questions (as of 3/12/2010)
Supplemental Directive 09-09, Introduction of HAFA—Short Sale and Deed-in-Lieu of Foreclosure (Issued November 30, 2009, but Exhibit A and Exhibit B were revised 3/12/2010 (see below))
Revised Short Sale Agreement (Exhibit A to Supplemental Directive 09-09)
Revised Alternative - NAR