Government sponsored entities (GSE), Fannie Mae and Freddie Mac, both issued new guidelines to servicers on June 1. The new stipulations allow homeowners with GSE owned or guaranteed loans to pursue a short sale or deed-in-lieu of foreclosure if they are unable to secure a modification under the Home Affordable Modification Program (HAMP) program. Both Fannie Mae and Freddie Mac encouraged servicers to begin implementing their short sale and deed-in-lieu procedures “immediately.” By August 1, all Fannie Mae and Freddie Mac servicers must incorporate Home Affordable Foreclosure Alternative (HAFA) into their operations and offer HAFA solutions such as short sale and deed-in-lieu options to eligible borrowers.
Like the original HAFA guidelines, Fannie and Freddie loans must first be found eligible for HAMP. If borrowers fail to fulfill HAMP obligations, a HAFA short sale or deed-in-lieu will be offered. Unlike the non-GSE HAFA program, Fannie and Freddie stipulate that HAFA can be applied only after “all other home retention workout options have been exhausted.”
Servicers must start using Fannie Mae’s HAFA guidelines for all conventional mortgage loans held in Fannie Mae’s portfolio that are part of a mortgage-backed securities (MBS) pool with the special servicing option or that are part of a shared-risk MBS pool for which Fannie Mae markets the acquired property. Freddie Mac’s HAFA guidelines apply to all “first-lien mortgages owned, guaranteed, or secured by Freddie Mac that were originated on or before January 1, 2009.”
Under the recently raised HAFA payouts, borrowers who successfully complete a HAFA short sale or deed-in-lieu will receive a $3,000 relocation assistance payout.
Joshua D. Carlson, Esq.