Treasury considers more tweaks to short sale program
The Treasury Department is considering more changes to the Home Affordable Foreclosure Alternatives program in order to boost short sales and deeds-in-lieu of foreclosure, according to officials administering the initiative. In May, the Treasury hosted a HAFA summit with representatives from the mortgage industry. They included mortgage servicers, investors, real estate professionals and insurers – the direct stakeholders in a short sale decision. A Treasury spokesperson said they are looking at making "modest changes and clarifications to program guidance," but no details could immediately be given. HAFA launched in April 2010 to provide servicers an incentive to boost short sales and DILs for loans that fell out of the larger Home Affordable Modification Program. Through May, participating servicers started 17,781 agreements under HAFA and completed 8,541. JPMorgan Chase (JPM) started nearly one-third of the agreements already in the process. In January, the Treasury eliminated some HAFA rules that constricted eligibility. For instance, servicers are no longer required to verify a borrower's financial information or determine if the borrower's total monthly mortgage payment exceeds a 31% debt-to-income ratio. But through April, the top-10 servicers provided more than 113,000 short sales and DILs through their own private programs. That's nearly 10 times the amount of HAFA. A wider HAFA program could cut into the 2.1 million trial modifications the top-10 servicers denied or canceled due to insufficient documentation, redefault or the borrower was deemed ineligible through April. Roughly 646,000 of these loans received an alternative modification, but servicers started another 307,000 and completed 136,000 foreclosures through April, according to the Treasury. Write to Jon Prior. Follow him on Twitter @JonAPrior.