HAFA Short Sale Education Guide

Home Affordable Foreclosure
Alternatives Program (HAFA)
Your Guide to Completing a Short Sale
Under the Federal Government’s HAFA Program
June 15, 2012

Screenshots are the exclusive property of Equator, LLC and used herein under limited license for Bank of America training
purposes only. Any distribution, reproduction, derivative, description or account of the screenshots is expressly prohibited
without the express written consent of Equator, LLC. ©2012 Equator, LLC. All rights reserved.

HAFA Short Sale Program

Guide Revisions
Updates to the HAFA guide are made on a regular basis, so visit the Agent
Resource Center (bankofamerica.com/realestateagent) to download the most recent
version.
Guide updates
• March 10, 2011
– Policy updates (Supplemental Directive 10-18)
– Milestone chart on ARASS (HAFA process with offer already in hand)
• Oct. 24, 2011
• Nov. 21, 2011
– Process improvements to ARASS milestone chart
• April 13, 2012
– Process and technology changes
• June 01, 2012
Go to: HAFA Defined Enhancements Investor Participation With Offer vs. Without Offer Equator Initiation Key Actions for Agents

2 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. ©2012 Bank of America Corporation

HAFA Defined




Home Affordable Foreclosure Alternatives (HAFA)
A Federal Government Program Timeline:
to Help Homeowners Who:
Program ends Dec. 31, 2013.
• Can’t afford their first mortgage. • The HAFA short sale or deed-in-lieu of
• Want to avoid foreclosure. foreclosure must have a transaction closing
date on or before Sept. 30, 2014.
• Have exhausted all modification attempts and
can’t keep their home.
Investor Participation:
Program:
• Fannie Mae and Freddie Mac:
• Allows homeowners to sell their home – Implemented their own versions of HAFA
through a short sale and settle mortgage debt in 2010.
with many benefits.
– Don’t participate in supplemental directive
– Offers relocation assistance to policy updates.
occupants who must vacate after
completing a HAFA short sale or a • FHA, VA and Ginnie Mae loans are not yet
deed in lieu of foreclosure. covered by a HAFA-type program.




Homeowner Benefits When to Consider

• Quickest option for a short sale decision • During initial discussions of alternatives to
when there is no offer. avoid foreclosure.
– A suggested list price is provided before • When the homeowner wants to leave the
listing the home. property and owes more on the mortgage
– Decision in as few as 10 business days than current fair market value.
once an offer is submitted.
• Either before or after a short sale offer is
• Deficiency is waived. received.
– The mortgage debt will be settled through
the program.
– No legal action can be taken on/against
the outstanding mortgage debt.
• $3,000 to primary resident at closing for
relocation assistance.
– Additional incentives up to $30,000 may
apply to eligible borrowers.*
• No cash contribution or promissory note
required to release any lien.
• Foreclosure process put on hold subject to
investor guidelines.

* Specific investor participation and eligibility criteria applies.



Initiating before offer…

$ Offer $
Document
Borrower Offer Offer
Initiation Collection/ Marketing Closing
Outreach Submission Analysis
Valuation

Program Collect List Home Submit Offer
Decision
Eligibility Homeowner for Sale in as few
Review Documents, as 10 days!*
Determine * HAFA only
Home Value
& Sign
Program
Agreement

HAFA short sale program is most beneficial

$ Offer $
when started prior to marketing and offer. Initiating after offer…
Document
Offer
Initiation Collection/ Closing
Analysis
Valuation

HAFA Collect Negotiate
If the homeowner already has an offer, they may still qualify for HAFA; Interest? Documents. Offer,
however, the process may take longer. Determine Submit to
Home Value Investor,
• If homeowner is eligible for HAFA, the agent and homeowner will Renegotiate
be notified.



HAFA Short Sale Program View the Eligibility Matrix

Requirements for HAFA Eligibility*

The Homeowner Has: The Mortgage:

• Exhausted all modification options, and/or • Originated on or before Jan. 1, 2009
(for the first lien).
• Decided to pursue a short sale or a deed in
lieu of foreclosure. • Has an unpaid principal balance less than
$729,750 for 1-unit properties.
The Property: – Higher balances are available for 2-4 unit
properties.
• No longer has occupancy requirements – No properties with more than 4 units
(SD 12-02). allowed.
• The first mortgage cannot be made to, or
secured by, properties owned by a
corporation, partnership, limited liability
company or other business entities.

* HAFA eligibility doesn’t represent a guarantee of qualification or approval, which is determined by the investor.



Enhancements – Policy Updates



HAFA Short Sale Program For more information about policy update, see:
HAFA 12-02 Enhancements

SD 10-18 Enhancements SD 12-02 Enhancements –
Effective June 1, 2012
• Eliminated the requirement to verify homeowner’s
financial information, including debt-to-income (DTI)
ratio. • Time frame extended: The HAFA short sale or
deed in lieu of foreclosure can be initiated up to
• Agent commissions clarified:
Dec. 31, 2013; however, the transaction must have
– Will not be deducted from third-party vendor a closing date on or before Sept. 30, 2014.
fees.
– Will be stated in the Short Sale Agreement. • Eligibility: Occupancy requirements have been
removed; however, the property can’t be owned or
secured by a business entity.
SD 11-08 Enhancements
• Increase from $6,000 to $8,500 cap available to
satisfy subordinate liens; $8,500 applies only to
• Relocation assistance may be used to pay for
transaction costs, such as the cost of legal those secured by a mortgage on the subject
representation, overdue utility bills or minor repairs. property.

• Property values may be re-evaluated after the 120-day • Relocation assistance: Limited to the primary
marketing period for extension. resident (borrower or occupant) of the property who
must vacate upon closing.
• The list price and/or the counter offer that is based on
the servicer’s assessment of value may be disputed by – Tenant can be eligible if occupying the
providing current comps and a written rationale. property as his principal residence and must
vacate upon closing.
– Vacant properties will not be eligible.

Fannie Mae and Freddie Mac are not participating in supplemental directive policy enhancements.



HAFA Relocation Assistance

For $3,000 HAFA Relocation Assistance paid at closing, see requirements below:

• Primary resident of property at time of signed agreement who must vacate upon closing
• Vacant properties will not qualify
Eligibility • Applies to HAFA short sales and deeds of lieu of foreclosure
• Tenant would be eligible only for the HAFA $3,000. Any further relocation assistance
available from additional incentive payout opportunities must be paid to the borrower

• Proof of residence will be required
Additional •
•
Social Security number and date of birth will be required
Borrower is responsible for requesting and managing tenant relocation assistance
Considerations • The HUD-1 must be updated

• Borrower:
• Request Tenant Package from Bank of America when agreement is signed
• Deliver package to occupant
Tenant • Ensure documents are completed/signed and submitted by agent prior to 15 days
before closing date
Relocation • Agent:

Actions • Upload signed/completed documents into Equator
• Send an Equator message to short sale specialist with subject line “Tenant Package
submitted”
• Ensure HUD-1 is updated



Investor Participation




HAFA Investor Participation
Take investor considerations into account to determine if homeowners can pursue a HAFA short
sale.
• The homeowner’s first mortgage loan • Participation in HAFA is on a loan-by-loan
must be owned by an investor basis, not an investor-by-investor basis.
participating in HAFA. – An investor may participate in HAFA on
– Fannie and Freddie loans have their own some loans and not on others.
version of HAFA with different – HAFA eligibility doesn’t represent a
requirements and are not participating in guarantee of qualification or
Supplemental Directive policy updates. approval, which is determined by the
• Subordinate mortgage/lien holders must investor.
agree to release their liens. • Agent commissions will be documented
– The homeowner and the agent are and agreed upon in the Short Sale
responsible for identifying all liens and Agreement.
obtaining their release.
– Most investors support a 6% commission
– Subordinate mortgage liens are capped at for a HAFA short sale.
$8,500; does not apply to mechanic and/or
HOA liens. See SD 12-02 for details. • Agents and/or homeowners can call
Customer Service at 1.866.880.1232 to
find out if their investor is participating.



With Offer vs. Without Offer



Traditional Compared to HAFA Short Sale
Traditional Short Sale HAFA Short Sale
General Qualifications Each homeowner’s situation is considered • Participating investors only
See Treasury guidelines for separately by investors • Unpaid principal balance < $729,750* (1 unit)
full HAFA details
• First lien mortgage originated on or before Jan. 1, 2009
• Completed documentation per Treasury
*Higher balances apply to 2-4 unit properties.

Initiate Process When you receive a valid offer • Before marketing the property – no offer required at start of process
• HAFA is also available upon receipt of a valid offer

Timeline for Decisions The offer starts the process, and a number of Before the marketing phase:
steps need to be completed prior to decision: • Qualified for HAFA participation
• Collect documents • Collect documents
• Payoff & internal analysis • Payoff & internal analysis
• Investor review • Investor/insurer review
• Decision Once an offer has been submitted, you will receive a decision in as
few as 10 business days if initiated prior to offer.

Cash/Promissory Note The investor/insurer may require No
Deficiency Pursued The investor may retain the right No

Foreclosure Holds Varies by investor – requires investor approval Auto hold once Short Sale Agreement is executed
Policies subject to change

Credit Impact Typically less than foreclosure — deficiency Typically less than foreclosure — deficiency charge-off will be
charge-off will be reported to credit bureaus reported to credit bureaus
Recommended List No Yes
Price Provided

Approval/Closure Rates Low-medium High after qualification
Relocation Assistance None HAFA $3,000 for primary resident, who must vacate upon closing
• Additional homeowner incentives may apply up to $30,000. Specific
investor participation and eligibility criteria apply.
Unrealized Short Sale Optional deed in lieu of foreclosure HAFA deed in lieu of foreclosure consideration; relocation assistance
included for primary resident.



HAFA Short Sale Process Milestones “RASS - No Offer”
Customer Care Qualification 120-Day
1.866.880.1232 Inform the Program Offer
& Home Marketing Closing
Weekdays: 8 a.m. – 11 p.m. EST Borrower Agreement Received
Saturday: 9 a.m. – 5:30 p.m. EST
Valuation Program
• HAFA solicitation • Return requested • Engage real estate • Show and • Submit Request for • $3,000 - $30,000 **
letter received qualification agent (if not already maintain home Approval of Short relocation assistance
• Acknowledge documents within 10 engaged) • Work with agent to Sale (RASS) and (paid after closing)
interest in days* • Receive and return negotiate release other documents, if • HAFA $3,000 is paid
program within 14 • Work with vendor to Short Sale of other liens (if not applicable only to the primary
Homeowner
days schedule home Agreement (SSA) serviced by Bank resident at time of
OR valuation • Request Tenant of America) signed agreement
• Call to inquire Package, if
about HAFA applicable

• Explain HAFA • Ensure homeowner • Sign Short Sale • Perform 21-day • Submit offer and • Notify post approval
benefits to returned requested Agreement (SSA) check-ins on remaining deal changes or
homeowner documents within 10 • Accept assignment marketing activity documentation closing delays as
• Initiate short sale days* in Equator (if and home • If offer needs to be necessary
in Equator • Work with homeowner Customer Care condition negotiated, respond • Give 72 hours notice
Agent • Tell homeowner to schedule home initiated) • Work with by the expiration prior to closing
to acknowledge valuation • List home homeowner to date (3 days) • Send required
interest in negotiate release of documents to lender
• Upload Tenant other liens (if not
program ASAP Package, if serviced by Bank of
applicable America)

• Send HAFA • Send document • Prepare and deliver • Perform 21-day • Respond to offer • Manage post-
solicitation letter request to Short Sale check-ins on in as few as 10 approval changes
• Confirm HAFA homeowner Agreement to marketing activity business days • Work with agent and
Bank eligibility has • Order home valuation homeowner and home title company to
been met to develop a • Enter the agent condition facilitate closing
of America
• Initiate file in recommended list noted on Short Sale
Equator if no price Agreement into
agent involved Equator

* Number of days depends on investor. Non-GSEs require 10 days per Supplemental Directive 10-18; however, Fannie and Freddie require 14 days. Under the HAFA
program, if homeowners do not receive an offer in the 120-day marketing period, they may be eligible for a deed in lieu of foreclosure per the Short Sale Agreement and
Treasury guidelines.
** Specific investor participation and eligibility criteria apply.



HAFA Short Sale Process Milestones “ARASS - With Offer”
Customer Care
1.866.880.1232
Weekdays: 8 a.m. – 11 p.m. EST
Initiation Document Collection/ Valuations Offer Analysis Closing
Saturday: 9 a.m. – 5:30 p.m. EST

• Work with agent to provide necessary • Receive HAFA Solicitation Letter, if eligible • $3,000 HAFA
information and documentation • Provide requested documents to agent within relocation
14 days (recommended) or call Customer assistance
Care to access homeowner portal (paid after closing)
• Sign Alternative Request for Approval of • Paid to only the
Homeowner Short Sale (ARASS) and Request for primary resident at
Mortgage Assistance (RMA) or Hardship time of signed
Affidavit and deliver to agent agreement
• Request Tenant package, if applicable
• Coordinate access to the property, if needed

• Create a free account at • Submit short sale offer and all supporting • Complete assigned tasks • Notify Bank of
agent.equator.com documents including requested homeowner and upload requested America of any
• Initiate the short sale and upload: documents within 14 days of solicitation letter documents post-approval deal
– Signed Purchase Contract – • Work with vendor to schedule home valuation • Respond if initial offer needs changes or closing
including Buyer’s Acknowledgment to be negotiated delays
• Complete new assigned tasks and reload
and Disclosure form offer documents • Adjust closing date during • Notify Bank of
– Short Sale Addendum counter offers America of
Agent – Estimated HUD-1 • Upload Tenant Package, if applicable scheduled closing
– IRS Form 4506-T • Work with homeowner and 72 hours in
– Bank of America Third-Party buyer if investors stipulate advance
Authorization Form changes to the deal
• Send funds,
• Begin offer negotiation and release of documents
additional liens if not serviced by Bank
of America

• Review initiation docs • Validate offer and supporting documents • Analyze collected • Manage post-
• Review HAFA eligibility* • Send Solicitation Letter to homeowner (if information; negotiate offer approval changes
eligible) to determine interest to present to investors • Work with agent
• Order home valuation and additional internal • Submit offer to mortgage and title company
information insurer and investors as to facilitate closing
Bank needed
of America • If ARASS-qualified, inform agent of new
Equator tasks • Receive approval, decline or
renegotiation stipulations per
* All traditional short sales initiated will be investor decision
reviewed for HAFA eligibility.
• Convey final investor
Go to: HAFA Defined Enhancements Investor Participation With Offer vs. Without Offer decision to Initiation
Equator agent, customer Actions for Agents
Key


HAFA Equator Process

“Without Offer” Eligibility Review
After the Borrower Contact Information is provided, the homeowner will be
immediately screened to determine if they are eligible to be reviewed for the Home
Affordable Foreclosure Alternative (HAFA) program. You will receive the HAFA alert
shown below if the homeowner is eligible for HAFA review.

©2012 Equator, LLC

If You Receive the HAFA Alert If You Do Not Immediately Receive It

The homeowner must contact Short Sale • The Equator record will be closed for this property.
Customer Care at 1.866.880.1232.
• The agent and the homeowner should market the
• The short sale process cannot move property.
forward until this contact is made. • Initiate a new short sale in Equator when an offer is
• Many of the initial steps require made on the property.
homeowner contact to determine program – For steps in completing this process, see
eligibility. Initiating a Short Sale After an Offer Is Received.



HAFA Equator Process

How to Submit an Offer
1. Click on Place Offer under the 1
Properties section.
2. Choose the property for which you
will enter an offer.
©2012 Equator, LLC

2 3
©2012 Equator, LLC

3. Click icon under the Submit column.
4. The Submit Short Sale Offer and
Upload Initiation Documents tasks 4
will open for you to complete.
©2012 Equator, LLC


Screenshots are the exclusive property of Equator, LLC and used herein under limited license for Bank of America training purposes only.
Any distribution, reproduction, derivative, description or account of the screenshots is expressly prohibited without the express written consent of Equator, LLC.
©2012 Equator, LLC. All rights reserved.

Three Key Actions for Agents



Three Actions for Real Estate Agents

Engage Homeowners Early

1
• Find out if the homeowner owes more than the home’s fair market value.
• Discuss short sale opportunities during initial conversations with the homeowner.
– If the homeowner would like to better understand their options or initiate the short sale themselves,
encourage them to call Customer Care at 1.866.880.1232.
• Explain the short sale process and how it can help avoid foreclosure.

Contact Bank of America Before the Home Is Listed

2 • Initiate the short sale in Equator – even if you don’t yet have an offer.
– The homeowner may be required to contact Customer Care to discuss participation in one of our
pre-offer programs, such as HAFA. If the homeowner isn’t eligible for a pre-offer program, then next
action is to market the home, obtain an offer and initiate new short sale in Equator.

Complete Required Tasks on Time

3
• Make sure all tasks are completed as soon as possible in Equator.
• Provide necessary documents as soon as possible to keep the process moving
forward.
• Communicate with your short sale specialist via Equator to reduce delays.




Commitment to Continued Improvement
Bank of America is committed to identifying new and different ways to
make the process transparent and efficient.

New Approaches
To Reduce Processing Times Where to Locate Additional Information

• Ongoing collection of feedback on Agent Resource Center
process, people and technology
bankofamerica.com/realestateagent
• Right-sized staff to meet service-level
expectations; dedicated team of short Dedicated Customer Care
sale professionals 1.866.880.1232
Monday – Friday 8 a.m. to 10 p.m.; Saturday 9 a.m. to 5:30 p.m. Eastern
• Enhanced our technology;
monthly upgrades ongoing For homeowners:
Bank of America Home Loan Assistance
• Resources for short sale education
bankofamerica.com/homeloanhelp



HAFA Short Sale Education Guide

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