The revisions to the HAFA guidelines are in the right direction, but the revisions to HAFA do not apply to first lien mortgages that are owned or guaranteed by Fannie Mae, Freddie Mac, or insured by a federal agency such as the Federal Housing Administration. Moreover, servicers are not required to implement the new rules to any loans retroactively. It is important to find out who services your loan and get the advice from a HUD counselor for FREE.
Servicers are only required to implement these changes on new files effective February 1, 2011. So, if you have a HAFA short sale at one of the lending institutions right now, it is being reviewed under the old rules. Servicers are not required to implement the new rules to any short sales retroactively.
An example of a common short sale delay is in cases whereas a second lienholder is NOT accepting the amount offered by the first lienholder, below is the direction recommended to servicers:
Release of Subordinate Liens Subordinate mortgage/lien holders will continue to be paid in order of priority as set forth in Section 6.2.4.2 of Chapter IV of the Handbook. However, servicers are no longer limited by the six percent cap with respect to payments to each subordinate mortgage/lien holder. The servicer, on behalf of the investor, shall determine the amount or percentage of the unpaid principal balance of the lien that will be paid to each subordinate mortgage/lien holder until the $6,000 aggregate cap is reached. Each servicer must include in its HAFA Policy how subordinate mortgage/lien holders will be paid. Investors continue to be eligible for incentive reimbursement for up to one-third of the cost to extinguish subordinate liens as described in Section 12.3 of Chapter IV of the Handbook.
Mortgage servicers and investors write their own guidelines under the Federal requirements to determine how to implement the program. For more information about your options, you should contact your mortgage servicer.
If you have questions about the program, or want guidance about how these options may impact your personal situation:
Contact your mortgage servicer
http://www.makinghomeaffordable.gov/contact_servicer.html
Speak to a HUD-approved housing counselor for free.
http://www.makinghomeaffordable.gov/counselor.html
Who services your loan? (easy to use links to find out quickly below)
Does Fannie Mae service your loan?:
http://www.fanniemae.com/loanlookup/
Does Freddi Mac service your loan?:
https://ww3.freddiemac.com/corporate/
Consider all your options and consult an attorney.
HAFA proposed revisions: http://kathleeninarizona.com/archive_details.php?arch=1040
