Servicers Streamlining Short Sales as HAFA Nears
With the Home Affordable Foreclosure Alternatives (HAFA) program kicking off in two weeks, servicers are making their final preparations for the oncoming wave of short sale requests. While boosting technology is key to the build-up, getting the right people in place could be more of a priority to handle the load. The US Treasury Department will launch HAFA on April 5, 2010. The program will provide incentives to servicers that provide short sales and deeds-in-lieu of foreclosure for borrowers who failed a modification through the Home Affordable Modification Program (HAMP). GMAC (GJM) is considered the leading servicer in the Home Affordable Modification Program by providing active and permanent modifications on 53% of the more than 66,000 eligible loans in its portfolio. GMAC began its build-up for the HAFA demand a month after HousingWire broke the HAFA story in October. In November 2009, GMAC formed a liquidation advisor unit to proactively contact borrowers who are not eligible for loan modifications to discuss some alternatives such as short sales. “We don’t currently have a backlog of short sale requests as many servicers do. We typically acknowledge a short sale offer within three days of receipt,” said James Olecki, a spokesperson for GMAC. GMAC also revamped its technology platform in December, when the company implemented a customized short sale workflow portal to streamline the approval process. The system permits borrowers and real estate agents to electronically submit short sale offers, similar to a platform launched last month by Equator, the largest vendor management platform used by real estate owned (REO) departments across the country. While GMAC is making strides in its technology department, Sanjeev Dahiwadkar, founder and CEO of IndiSoft, a technology developer specializing in the default services industry, said the right people in place can play a vital role. “While technology has its critical place in the short sale process, we believe because of the high emotions involved in the decision making process, that there is a still a small portion that is subjective and requires human intervention,” Dahidwadkar said. “It is equally important for technology to provide a transparent and secure communication channel between all participants to help in the decision making process about how much losses to take or what they can live with.” Scott Gillen, senior vice president of strategic initiatives at Stewart Lending Services, an REO asset management provider, is seeing two different approaches. “We’re seeing two things, a build up internally just for the review of what’s coming in. What we’re also seeing though is a lot of outreach to vendors such as Stewart to support a lot of the heavy lifting, and when I say that, you’ve got all of the HAMP denials that are theoretically eligible,” he said. Most of the companies, according to Gillen, are looking for bandwidth support primarily in the solicitation stage and the follow up with the borrower to determine their interest in pursuing a possible short sale or deed-in-lieu. According to Olecki at GMAC, the servicer acknowledges a short sale request within three days of receiving one, and he has seen a reduction in the overall short sale timeline. A short sale agreement between the borrower and the servicer under HAFA expires after 120 days. Write to Jon Prior. The author holds no relevant investments.