OfflineI received this today from one of my investment groups. Does anyone have an Opt-Out Form that they've been using on their Short Sale deals?
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Before you attempt another short sale deal, there is a critical new piece of paperwork you MUST have signed by the homeowner and include with the short sale package.
A HAFA opt-out form.
Recently, investors have been getting through the short sale process, only to have the bank say that before they accept their offer, they want to see if the homeowner qualifies for HAFA. The bank wants to do this because if they can get rid of the house through HAFA, they get some compensation from the government.
A little known part of the HAFA program is that it forces the homeowner to sign a deed-in-lieu in the beginning of the process, and then gives the bank 4 months (or more depending on market conditions) to try to sell it. If they can’t get it sold, the bank can just take the house back with the deed-in-lieu.
This form not only opts them out of that onerous program, but also protects you by serving as a notice to the homeowner that that program exists. That way they can’t claim that they were unaware of the program when they agreed to work with you.
This opt-out form is absolutely critical for doing short sales in today’s real estate market. Don’t do a deal without one!
Cindy
Life isn’t about waiting for the storm to pass…
It’s about learning to dance in the rain.
The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward. - Amelia Earhart
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
1. Federal Guidelines took effect April 5, 2010.
2. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac will issue their own versions of HAFA in coming weeks.
3. Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
4. Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
5. Provides financial incentives: $1,500 for borrower relocation assistance.
6. The HAFA guidelines are voluntary, but major banks and servicers—including Bank of America, Chase, Wells Fargo, and Citimortgage—as well as dozens of smaller lenders, are expected to participate.
7. The property must be the borrower’s principal residence.
8. The current unpaid principal balance must be equal to or less than $729,750
9. Services must evaluate a borrower for HAMP prior to any consideration being given to HAFA options.
10. Mortgage loan must be a first lien mortgage originated on or before January 1, 2009.
11. The mortgage must be delinquent or default is reasonably foreseeable.
12. The borrower’s total monthly mortgage payment must exceed 31 percent of the borrower’s gross income.
13. Every potentially eligible borrower must be considered for HAFA before the borrower’s loan is referred to foreclosure or the servicer allows a pending foreclosure sale to be conducted.
14. Servicer must proactively notify the borrower in writing of the availability of HAFA and allow the borrower 14 calendar days from the date of notification to contact the servicer and request consideration.
15. Purchaser may not sell the property within 90 calendar days of closing.
16. SSA must contain a notice that the servicer will allow a portion of gross sale proceeds to be paid to subordinate lien holders in exchange for release and full satisfaction of their liens.
17. The servicer may terminate the SSA before its expiration due date if the borrower’s financial situation improves significantly, the borrower qualifies for a modification, or the borrower brings the account current or pays the mortgage in full.
18. A borrower may not participate in a HAMP Trial Period Plan and agree to a HAFA SSA simultaneously.
19. Servicer may initiate or continue with an existing foreclosure proceeding during the HAFA process, but may not complete the foreclosure sale.
20. Servicer may require the borrower to make monthly mortgage payments during the term of the applicable SSA agreement pending transfer of the property ownership, but in no event may the amount of the borrower’s monthly payment exceed the equivalent of 31% of the borrower’s gross monthly income.
21. Freddie Mac selected by Treasury as the compliance agent for HAFA and will utilize Freddie Mac employees to conduct independent compliance assessments.
22. Subordinate lien holders may receive up to $3000.00 of the gross sale proceeds in exchange for a lien release and full release of borrower liability.
Cindy
Life isn’t about waiting for the storm to pass…
It’s about learning to dance in the rain.
The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward. - Amelia Earhart
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard