On December 28th the US Treasury issued Supplemental Directive 10-18 which announced major changes/improvements in their HAFA Short Sale and Deed-in-Lieu programs. The changes become effective on Feb. 1, 2011 and include:
Deletion of the requirement that a borrower’s payment exceed 31% of their gross income;
Increasing the allowable vacancy period from 90 days to 12 months and deleting the requirement that the borrower’s move be job related;
Deletion of the 6% of principal balance that subordinate lien holders may receive. A maximum of $6,000, in aggregate, may still be paid to all subordinate lien holders but the servicer has the discretion of paying some or all of it to the subordinate lien holder(s). For example, on a $50,000 second lien, $3,000 was the maximum the servicer could pay the second lien holder under the old rules. Now the second can receive up to $6,000.
The commission stated in the listing agreement must be honored by the servicer so long as it does not exceed 6% of the sales price;
Servicers will be required to determine a borrower’s HAFA eligibility and issue or deny the SSA within 30 calendar days of receipt of all documents;
Servicers will be required to approve, disapprove or counter a short sale contract submitted with an Alt. RASS within 30 calendar days of receipt of all documents;
Servicers who accept a deed-in-lieu of foreclosure may allow the borrower to lease-back the home or re-purchase it at some future time.
These changes should make HAFA short sales viable for many more sellers and enable faster and easier pre-approval. All of these changes will be included in Hogan School’s upcoming HAFA Short Sale classes.
To read the supplemental directive visit https://hoganschool.com/documents/d207.pdf
