Supplemental Directive 09-09 Page 3
subordinate and other lien holders. The HAFA program simplifies and streamlines the use of short sales and DIL options by incorporating the following unique features:
Complements HAMP by providing viable alternatives for borrowers who are HAMP-eligible.
Utilizes borrower financial and hardship information collected in conjunction withHAMP, eliminating the need for additional eligibility analysis.
Allows the borrower to receive pre-approved short sale terms prior to the property listing.
Prohibits the servicer from requiring, as a condition of approving the short sale, areduction in the real estate commission agreed upon in the listing agreement.
Requires that borrowers be fully released from future liability for the debt.
Uses standard processes, documents and timeframes.
Provides financial incentives to borrowers, servicers and investors.
Each participating servicer must develop a written policy, consistent with investor guidelines,that describes the basis on which the servicer will offer the HAFA program to borrowers. This policy may incorporate such factors as the severity of the loss involved, local market conditions,the timing of pending foreclosure actions and borrower motivation and cooperation.Servicers must evaluate a borrower for a HAMP modification prior to any consideration beinggiven to HAFA options in accordance with the provisions of Supplemental Directive 09-01 andany supplemental HAMP guidance. Borrowers that meet the eligibility criteria for HAMP butwho are not offered a Trial Period Plan, do not successfully complete a Trial Period Plan, or default on a HAMP modification should first be considered for other loan modification or retention programs offered by the servicer prior to being evaluated for HAFA.In accordance with the provisions of Supplemental Directive 09-01, a loan meets the basiceligibility criteria if all of the following conditions are met:
The property is the borrower’s principal residence;
The mortgage loan is a first lien mortgage originated on or before January 1, 2009;
The mortgage is delinquent or default is reasonably foreseeable;
The current unpaid principal balance is equal to or less than $729,750
The borrower’s total monthly mortgage payment (as defined in Supplemental Directive09-01) exceeds 31 percent of the borrower’s gross income.
Pursuant to the servicer’s policy, every potentially eligible borrower must be considered for HAFA before the borrower’s loan is referred to foreclosure or the servicer allows a pending
This amount refers to 1 unit properties. Higher amounts apply to 2 to 4 unit dwellings.