Fannie Mae released updated documents for servicers to use when processing a short sale in the Making Home Affordable Foreclosure Alternatives, or HAFA, program. In early June, Fannie Mae and Freddie Mac issued guidelines for the government-sponsored enterprise (GSE) versions of the program, which provides incentives for servicers, mortgage owners and distressed borrowers to complete short sale transactions when the borrower can’t or does not want to complete a Making Home Affordable Modification Program (HAMP) workout plan. The GSE HAFA programs begin Aug. 1, but servicers are allowed to use HAFA immediately. The Fannie Mae forms released Monday include the initial solicitation letter, the short sale agreement, the request for approval of short sale, request for approval of short sale without short sale agreement and the HAFA deed-in-lieu of foreclosure form. Freddie Mac has its version of the same forms on its website. The Fannie Mae solicitation letter includes a form homeowners return to their servicer. It includes an option for the borrower to transfer their property to Fannie Mae in a deed-in-lieu of foreclosure transaction, and then stay in the home as a renter through Fannie’s deed for lease (D4L) program. In the D4L program, the homeowner-turned-renter is required to pay fair market rent to stay in their home for up to 12 months. The renter must have enough income to sustain a 31% income-to-rent ratio and rental payments are not subsidized by Fannie Mae, but could include renters eligible for Section 8 payments. The program is designed to keep people living in homes that would otherwise be unoccupied until sold as Fannie Mae REO. But Fannie Mae is not publicly saying how long it’s willing to continue its newfound role as landlord, other than to say it’s prepared to do so at least for the near future. That could slow down the pipeline of REO properties for sale that will inevitably need to be sold. Servicers are ramping up their short sale efforts in response to both the GSE and Treasury Department versions of HAFA. In the case of Green River Capital (GRC), the servicer is tapping its network of more than 5,000 brokers that it uses to conduct broker price opinion (BPO) valuations to reach out to distressed borrowers. Acting on behalf of GRC subsidiary GR Financial, the trained brokers conduct door-knocking campaigns and deliver short sale solicitation letters. After the initial contact is made, the brokers have the potential to become the listing agent for the borrower’s short sale. Write to Austin Kilgore.
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