Today, June 1, 2010, Fannie Mae released Servicing Guide Announcement SVC-2010-07: Introduction of Fannie Mae’s Home Affordable Foreclosure Alternatives Program. The announcement provides an overview of the Fannie Mae Home Affordable Foreclosure Alternatives (HAFA), which, is designed to mitigate the impact of foreclosures on borrowers who are eligible for a loan modification under the Home Affordable Modification Program (HAMP), but ultimately were unsuccessful in obtaining one.
From the Fannie Mae Website:
“Fannie Mae’s HAFA provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu (DIL) of foreclosure to avoid a foreclosure on eligible loans, which helps preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration.
The effective implementation date is August 1, 2010; however, servicers are encouraged to implement the Fannie Mae HAFA earlier than that date.
HAFA Program Summary
The Fannie Mae HAFA program simplifies and streamlines the use of short or “preforeclosure” sale and deed-in-lieu of foreclosure (DIL) options by incorporating the following unique features:
Complements HAMP by providing alternatives for borrowers who are HAMP eligible (including borrowers facing imminent default);
Utilizes verified borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis;
Allows the borrower to receive pre-approved short sale terms prior to the property listing;
Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement;
Releases the successful HAFA borrower from future liability for the debt;
Uses standard processes, documents, and timeframes;
Provides financial incentives to borrowers, servicers and subordinate lienholders.”
For complete information click here.