The Home Affordable Modification Program (HAMP) is a voluntary modification program that aims to help 
homeowners avoid foreclosure as part of the Obama Administration’s larger Making Home Affordable (MHA) initiative.
HAMP provides incentives for Fannie Mae, Freddie Mac, and participating servicers to reduce first lien mortgage payments for eligible borrowers to 31% of their gross monthly income (before taxes), using specific modification steps.
The following material outlines the HAMP process for borrowers:
Am I Eligible?
| Borrower EligibilityYOU must be: | Loan EligibilityYour LOAN must be: |
| (1) Seeking a modification for a 1-4 unit property that is your primary residence. (Vacant, condemned or investment properties are not eligible.)(2) Carrying a mortgage payment (with principal, interest, property taxes, homeowner’s insurance, and HOA dues) greater than 31% of your gross monthly income.(3) Able to document why you are behind on your mortgage OR why there is an imminent risk that you will fall behind. (You do not have to be behind on your mortgage to qualify for HAMP.)
(4) Unable to pay your mortgage with available liquid assets (e.g., savings or checking accounts). (5) Able to document your gross monthly income AND have enough income to sustain a modified mortgage payment. You may still be eligible if you are in bankruptcy or foreclosure. |
(1) A conventional (not FHA or VA) loan that is owned by Fannie Mae/Freddie Mac OR is being serviced by a participating HAMP servicer with an unpaid principal balance. You can determine if your loan is owned by Fannie Mae or Freddie Mac using online tools on the Making Home Affordable website (www.makinghomeaffordable.gov). This website also provides a list of participating HAMP servicers.(2) A first lien originated on or before January 1, 2009 that has not previously been modified under HAMP. Home equity lines of credit may be eligible for HAMP if the loan is the first and/or only lien on a property.(3) Within the unpaid principal balance limit for your type property ($729,450 for 1 unit; $934,200 for 2 unit; $1,129,250 for 3 units; $1,403,400 for 4 units). |
How do I Apply?
1. Gather documentation of your monthly income and expenses before talking to your servicer, including
Most recently-filed tax return
Two most recent paystubs, and/or proof of other household income. Other income documentation may include Social Security or pension award letters, divorce decrees, child support orders, or profit and loss statements for self-employed people. Servicers should consider income of all household members for a HAMP modification, even if not all are borrowers named on the note.
Estimated monthly household budget, including expenses such as food, utilities, medicine, charity donations, association dues and entertainment. Be sure to include account balances and monthly payments on all outstanding debts, such as home equity loans, student loans, car loans and credit cards. Have this information ready, even if you are currently unable to pay these debts.
Recent bank statements—checking and savings.
Information on other investments or assets you own.
2. Complete the Request for Modification and Affidavit (RMA) and 4506T-EZ forms (available at online at www.makinghomeaffordable.gov).
3. Submit your completed RMA, signed 4506T-EZ form, signed tax return, proof of income, recent bank statements, and a current utility bill to your servicer with a cover letter stating your request to be considered for a HAMP modification. Be sure to write your loan number on each page you send to your servicer. You should fax these documents and submit them by certified mail, if possible. Keep copies of everything you submit.
4. Call your servicer. Be prepared to discuss your financial information to determine your eligibility for HAMP.
What Happens Next?
Your servicer will review your eligibility based on the information you have provided. This will include verifying your income and requesting additional documentation if needed, determining the net present value (NPV) of your house, analyzing your credit report to determine your expenses and debt-to-income (DTI) ratio, and obtaining your tax returns from the IRS (using the 4506T-EZ form). Your servicer is not permitted to charge you a fee to apply for HAMP, or require you to pay any related costs—such as an appraisal fee or IRS tax return fee.
Your servicer will then analyze your loan using a series of steps (the Waterfall analysis), and formulate ways to reduce your monthly mortgage payment to 31% of your gross monthly income. As outlined in Chapter 2.2, these may include any of the following:
1. Adding the total past-due amount (arrearage)—including interest, attorney costs and escrow shortages—to the principal of the loan. (Late fees should be waived and not capitalized as part of the arrearage.)
2. Reducing the interest rate. Servicers can lower the existing rate by increments of .125 percent until the payment amount reaches the desired debt-to-income ratio—as low as 2 percent. The modified rate will apply for the duration of the loan, unless it is below the current market rate. In that case, the rate will adjust over five years until it reaches the market rate, and will then be fixed.
3. Extending the term of the mortgage. A mortgage can be extended up to 480 months (40 years).
4. Subtracting a portion of the principal owed on the loan (called a principal forbearance). This amount is not forgiven, but is due when the loan matures or is paid off, as in a balloon payment. In the meantime, it is not amortized and does not accrue interest.
Remember: Your servicer will only use the steps necessary to reach this target payment amount.
While your modification request is being reviewed, contact your servicer regularly. Keep a record of all representatives you talk to, times and dates that you call, instructions given to you, and any other information about the status of your loan. If you are asked to submit additional documentation, do so promptly and keep copies for your own records.
If you are approved:
You will receive a letter explaining the terms of your trial period. The modified trial payment will include an escrow for taxes and insurance even if you have previously waived this option. Do not sign a modification that you cannot afford. If you agree to the proposed modification, follow any instructions given by your servicer and make your trial period payment on time. There is no grace period for trial period payments and you will be disqualified for making late payments.
If you are denied:
Your servicer is required to send you a notice by mail explaining why you were denied. This letter should provide information about other loss mitigation options that you may qualify for. If you want more information about why you were denied or want to dispute your servicer’s determination about your eligibility, you should call your servicer and ask to speak to a supervisor.
You can also call the Making Home Affordable Help Team (MHA HELP) at 1-888-995-HOPE or 1-888-995-4673 to speak to a counselor. These counselors are trained to answer questions and intervene with servicers on behalf of borrower
1.2 HAMP: What’s New and What You Need to Know
The Treasury Department and the Department of Housing and Urban Development have taken steps to streamline HAMP procedures. As of January 2010, the program had enrolled over 850,000 delinquent borrowers for trial modifications, but had encountered problems in converting those trials into permanent modifications.
HAMP Problems to Date: Missing Documentation
Earlier reports indicated that many of these conversion problems resulted from missing documentation. Servicers reported that borrowers were not providing the requested information. Meanwhile, borrowers and consumer advocates maintain that the servicers are mishandling or losing the paperwork.
New Guidance for Servicers
Recent guidance has attempted to mitigate this problem of missing documentation for servicers. Supplemental Directive 10-01 makes the following changes:
1. Fully Verified Documentation. As of June 1, 2010, a borrower’s eligibility for a modification must be fully verified before the borrower enters the trial period. An earlier directive gave servicers the option of placing a borrower into a trial period based on verbal financial information supplied by the borrower which was subject to verification during the trial period. New applicants will now have to supply an Initial Package which will include:
• Request for modification (RMA – Request for Modification and Affidavit – see form in chapter appendix) including a hardship statement and optional demographic information
• Acceptable evidence of income
• IRS Form 4506-T, Request for Transcript of Tax Form.
The servicers must send written confirmation of receipt of these documents within ten business days, along with a description of the evaluation process and a projected time line, and must maintain evidence of the date the Initial Package was received in its records. The servicer then has 30 days to review the package and notify the borrower of any missing data. The directive also establishes deadlines for the borrower to supply the missing information before being dropped from consideration by the program. If the package is complete, the servicer must then either send the borrower a Trial Period Plan Notice, or determine that the borrower is not eligible for HAMP and notify him of that ineligibility and of any other mitigation possibilities.
2. Proof of Income / Eligibility. Another frequent complaint about the program from borrowers has been that rules are unevenly or even unfairly applied. In the past, the Obama Administration required most trial modifications to be placed in a temporary
Preview period to ensure that borrowers were being fairly evaluated. Servicers were temporarily banned from canceling an active trial modification during this review period for any reason other than the eligibility of the property. During the review period the total number of conversions more than doubled.
The new directive sets out firm conditions which must be met to establish eligibility, such as acceptable forms of income verification and application of rental income. These changes, along with the upfront documentation, are designed to make it easier and quicker to move trial modifications to permanent status, and use resources more effectively.
3. New Standards Set for Forbearance of Principal Balance. Under the new directive, servicers have two possible ways of calculating the amount they may be required to forbear:
a. 30 percent of the unpaid principal balance of the mortgage loan
b. An amount resulting in a modified interest bearing balance that would create a current mark-to-market loan-to-value ratio equal to 100 percent.
The servicer is required to use the greater of these two calculations. If the borrower’s monthly mortgage payment cannot be reduced to the target monthly mortgage payment under either of these options, the servicer may consider the borrower ineligible for a modification. This does not, however, bar servicers from exceeding those amounts in order to achieve the target 31 percent ratios for both NPV-positive and NPV-negative loans. The directive also clarifies the way in which Net Present Value is to be determined in order to have consistent results at both the beginning and end of the trial period.
Two-step Modification Process
Once the borrower is deemed eligible for the program there is a two-step process for modification:
Step 1 – Trial Mod. The servicer will send out a Trial Period Plan Notice to the borrower describing all terms and payment due dates. The first payment by the borrower will be deemed as evidence of acceptance of the plan.
Step 2 – Permanent Mod. If the borrower is, in the servicer’s judgment, current at the end of the three month period, a permanent modification will be issued.
The directive also sets out firm guidelines for current trial participants who were admitted to the programs before their eligibility was determined in order to compensate for this and move them to conversion.
Summary of Most Recent HAMP Changes
On March 25, 2010, the Obama Administration, including Federal Housing Administration (FHA) Commissioner David H. Stevens, announced changes to the Home Affordable Modification Program (HAMP) and enhancements to the FHA’s refinance program. The Federal cost of these changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP).
Unemployed Borrower Addition. Under the HAMP enhancements, unemployed borrowers meeting eligibility criteria may have their mortgage payments temporarily reduced to an affordable level for at least 3 months (up to six months for some borrowers) while they seek employment. Eligible homeowners under HAMP must live in an owner-occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship. Servicers are required to consider an alternative modification approach that emphasizes principal relief.
1.3 Bringing Second Lien Holders Onboard: 2MP
Critics of the HAMP program have pointed out that unless junior lien holders cooperate with the modification process, the national foreclosure problem in the U.S. will not improve substantially. The supplemental 2MP program was designed to address this problem. And as the mortgage crisis has evolved, second lien holders are now more willing to consider modifying or extinguishing their loans which are no longer supported by any equity in the properties.
Under this program, second lien holders who are 2MP participants must contact all their borrowers who have received HAMP modifications on their first loans, notifying them of the new payment relief options.
Those options are:
1. Modify the loan according to a defined protocol
2. Cancel the loan, in which case the servicer receives a lump sum payment from the Treasury Department as compensation.
The 2MP modification or cancellation would be made based on the financial information provided by the borrower when applying for a modification of the first loan under HAMP—without additional evaluation by the second lien servicer.
Modification and Extinguishment Eligibility
As with any program, 2MP has guidelines and eligibility restrictions (PDF format)
Only second liens with corresponding first liens that have been modified under HAMP are eligible for a modification or extinguishment.
Second lines originated on or before January 1, 2009 are eligible for a modification or extinguishment under 2MP.
A second lien may be modified only once under 2MP
A mortgage loan that is subordinate to a second lien (i.e.: third, fourth position loans, etc) is ineligible under 2MP. However, modification or extinguishment of such a subordinate mortgage lien in place of the second lien will not satisfy the servicer’s obligation under 2MP to modify or extinguish the second lien.
If a second lien is modified under 2MP, The servicer is not eligible for payment of extinguishment incentives under 2MP.
A mortgage lien that would be in second lien position but for a tax lien, a mechanic’s lien or other non-mortgage related lien that has priority is eligible under 2MP.
A second lien on which no interest is charged and no payments are due until the first lien is paid in full (e.g., FHA partial claims liens; equity appreciation loans) is not eligible under 2MP.
Borrowers may be accepted into the program if a fully executed 2MP modification agreement or trial period plan is in the servicer’s possession on December 31, 2012.
All servicers of eligible second liens may participate in 2MP. A servicer need not service the related first lien or participate in HAMP in order to participate in 2MP.
We will now discuss the specific provisions of the two options under 2MP.
Modification of a Second Loan
The 2MP modification offer may be prepared during the HAMP trial period, or on after the date the HAMP modification becomes effective. However, the final terms of the HAMP modification are necessary to determine the terms of the 2MP modification.
Servicers must follow standard modification steps, similar to HAMP, to modify the second lien. These include:
1. Capitalization
2. Interest rate reduction
3. Loan tem extension
4. Principal forbearance
5. Trial period requirements.
Cancellation of a Second Loan
When the 2MP extinguishment option is utilized, the second lien servicer, investor, and any mortgage or other insurer must relinquish all rights and remedies against the borrower(s) related to the second lien obligation, and the borrower may not be required to sign a
promissory note or be charged a fee. This is very important, as large numbers of recourse loans would become non-recourse loans under these terms, regardless of their prior status.
After the extinguishment of the second lien, servicers must take all necessary action to cancel the indebtedness, release the second lien in a timely manner, and promptly send the cancelled documents to the borrower.
Pre-Foreclosure Specialist Certification – HAMP/HAFA Page 9 Pre-Foreclosure Specialist Certification – HAMP/HAFA Page 10
1.4 HAFA in Action: What Impact Will HAFA Have?
The following is designed to provide an industry perspective on the HAFA program as it unfolds. Opinions will vary, and time will tell what aspects of the program have succeeded. Meanwhile, some food for thought:
An Unproductive Stand-off
There are many self-designated “short-sale experts” who criticize HAFA in the harshest terms: “Waste,” “joke,” and “failure” are terms heard frequently in training seminars, audio conferences, webinars and videos. On the other side, its supporters exclaim that HAFA is changing the short-sale world overnight.
The debate will continue, because HAFA is a high-profile government program, but also because it’s still in process. It’s easy to have an opinion when no facts are in! People in the industry should remember that most of the commentary thus far is only speculation.
Keeping an Open Mind
No one benefits from premature conclusions, particularly with a program still in its earliest stages. A better approach would be to give HAFA a chance to work, and allow the Treasury Department time to make the inevitable adjustments.
HAFA was initiated without much input from working real estate professionals. The agents in the short-sale trenches weren’t given a chance to voice their suggestions and grievances. That’s changing. The Treasury Department has made it clear that it wants to hear from professionals like you, who will have much to contribute as the program matures.
The HAFA program has put many important short-sale issues on the table, and that alone is good news for real estate agents, who have labored for years in a difficult, unpredictable environment.
One Bad Experience Does Not a Program Spoil
As with any program in its infancy, there will be frustrations and failures for those dealing with HAFA. If you know this and are prepared for it, you could find yourself pleasantly surprised by success! And when you do experience difficulties, use them to provide constructive criticism to the mortgage servicer and the Treasury Department.
A word of encouragement: Don’t give up on the program if things don’t go well immediately. The HAFA program is a very ambitious step by Treasury to bring sanity to a badly flawed system. We shouldn’t be too quick to criticize when the task proves daunting. In fact, we should take the opportunity to contribute as much constructive input as possible. This is a good way to show appreciation for Treasury’s willingness to address what has been a national financial disaster
No one associated with HAFA expects it to definitively solve the short sale crisis. It would be unwise for those in the industry to raise expectations unreasonably high before the results are clear. Those that believe in its value and potential cam best serve the HAFA program can by tempering the language of their responses. Meanwhile, those that want to write HAFA off as a failure may want to write in pencil! At the very least, many homeowners will finally be able to escape unmanageable mortgages with their dignity reasonably intact.
Now let’s look at some of the main points of HAFA (Supplemental Directive 09-09 Revised 3-26-10)
As a PSC, you will become very familiar with the concept, forms, timelines, and benefits of the HAFA program. What follows is an overview, which will be very important for your future as a real estate professional. HAFA and related programs will almost certainly comprise a large part of your business in the years ahead.
The Obama Administration released guidelines and uniform forms for its Home Affordable Foreclosure Alternatives Program (HAFA) on November 30, 2009 and released an updated version on March 26, 2010. April 5, 2010 is the effective date for the program.
1.5 About HAFA
HAFA, which will help homeowners who are unable to retain their homes under the Home Affordable Modification Program (HAMP), provides incentives regarding short sales and deeds-in-lieu of foreclosure.
The program:
• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP-eligible but nevertheless unable to keep their homes.
• Uses borrower financial and hardship information already collected under HAMP.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds and acceptable closing costs).
• Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holders receives an incentive under HAFA, those debts as well (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses a standard process, uniform documents, and time frames/deadlines.
• Provides financial incentives: $3,000 for borrower relocation assistance; $1,500 for servicers to cover administrative and processing costs; and up to a $2,000 match for investors for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may consider factors.
such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.
• The deadline for implementation by servicers was April 5, 2010. The program sunsets on December 31, 2012.
1.6 HAFA Timeline
Determination of Eligibility and Notification
Servicers must consider HAMP-eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:
• Does not qualify for a HAMP trial period plan
• Does not successfully complete a HAMP trial period plan
• Is delinquent on a HAMP modification (misses at least 2 consecutive payments)
• Requests a short sale or deed-in-lieu (DIL)
If the servicer determines that a borrower is eligible, based on its written policy and the program rules, it will take the following steps:
• If the servicer has not already discussed a short sale or DIL with the borrower, it must notify the borrower in writing of these options and give the borrower 14 calendar days to respond, orally or in writing.
• If the borrower does not respond, that ends the servicer’s duty to give a HAFA offer.
• If the borrower asked for consideration but a short sale or DIL is not available, the servicer must offer an explanation to the borrower and provide a toll-free number.
Short Sale Agreement
The borrower has 14 calendar days from the date of the Short Sale Agreement (SSA) to sign and return it to the servicer. The SSA must give the borrower an initial period of 120 days to sell the house (servicers may extend up to a total of 12 months, if the borrower agrees).
Purchase Offer
Within 3 business days of receiving an executed purchase offer, the borrower (or agent) must submit a completed Request for Approval of Short Sale (RASS) to the servicer, including:
• A copy of the sale contract and all addenda
• Buyer documentation of funds or pre-approval/commitment letter from a lender
• All information on the status of subordinate liens and/or negotiations with subordinate lien holders.
Pre-Foreclosure Specialist Certification – HAMP/HAFA Page 13
Servicer Approval
Within 10 business days after the servicer receives the RASS and all required attachments, the servicer must approve or deny the request and advise the borrower (with a statement of the reasons in the case of disapproval).
Closing and Lien Release
The servicer may require the closing to take place within a reasonable period after it approves the RASS, but not sooner than 45 days from the date of the sales contract unless the borrower agrees.
The servicer must follow local or state laws to time the release of its first mortgage lien. If local or state law does not require release within a specified time, the servicer must release its first mortgage lien within 30 days. Investors must waive rights to seek deficiency judgments and may not require a promissory note for any deficiency. Rules also apply to participating junior lien holders.
1.7 HAFA Facts
Who is eligible for HAFA?
The borrower must meet the basic eligibility criteria for HAMP:
• Principal residence. The property may be vacant up to 90 days before the date of the Short Sale Agreement (SAA), Alternative Request for Approval of Short Sale, or DIL but only if the borrower documents they were required to relocate at least 100 miles from their home for purposes of employment and they have not purchased another property in the 90 day period.
• First lien originated before 2009
• Mortgage delinquent or default is reasonably foreseeable
• Unpaid principal balance no more than $729,750 (higher limits for two-to-four-unit dwellings)
• Borrower’s total monthly payment exceeds 31 percent of gross income
How is the program being implemented?
Supplemental Directive 09-09 (revised March 26, 2010) gives servicers guidance for carrying out the program.
A short sale agreement (SSA) will be sent by the servicer to the borrower after determining the borrower is interested in a short sale and the property qualifies. It informs the borrower how the program works and the conditions that apply.
After the borrower contracts to sell the property, the borrower submits a “Request for Approval of Short Sale” (RASS) to the servicer within 3 business days for approval. If the
borrower already has an executed sales contract and asks the servicer to approve it before an SSA is executed, the Alternative RASS is used instead. The servicer must still consider the borrower for a loan modification.
What are the steps for evaluating potential candidates?
1. Borrower solicitation and response
2. Assess expected recovery through foreclosure and disposition compared to a HAFA short sale or deed in lieu of foreclosure (DIL)
3. Use of borrower financial information from HAMP
4. Property valuation
5. Review of title
6. Borrower notice if short sale or DIL not available (to borrowers that have expressed interest in HAFA).
Real Estate Commissions under HAFA
• Under updated guidelines and forms issued on March 26, 2010, the servicer sets the amount of commission in the SSA as a “reasonable and customary” closing cost. NAR has challenged this change to the November 30, 2009, guidelines that had set the commission at the amount in the listing agreement, not to exceed 6 percent.
• However, if the Alternative Request for Approval of Short Sale is used (where an executed sales contract is submitted to the servicer for approval before a SSA is executed), the amount of the commission continues to be the amount in the listing agreement, not to exceed 6 percent.
• At the urging of NAR, the Treasury guidelines issued on March 26 rescinded the November 30, 2009 policy authorizing the servicer to reduce the real estate commission by a specified amount to pay a vendor/negotiator hired to assist the listing broker. This is a major improvement.
• Neither buyers nor sellers may earn a commission in connection with the short sale, even if they are licensed real estate brokers or agents. They may not have any side deals to receive commission indirectly.
What else should I know?
• The deal must be arm’s length. Borrowers can’t list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship.
• The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, forgiven debt will not be taxed if the amount does not exceed the debt that was used for acquisition, construction, or rehabilitation of a principal residence. Check with a tax advisor or the IRS.
• The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment, which may hurt credit scores.
• Buyers may not reconvey the property for 90 days.
1.8 HAFA Forms
Pre-Foreclosure Specialist Certification – HAMP/HAFA Page 16
[Name of Servicer] [Name of Borrower]
[Address of Servicer] [Name of Co-Borrower]
[Address of Borrower]
[Loan #]
[Servicer FAX] [Borrower Phone]
[Servicer Email] [Borrower Email]
[Date]
Dear [borrower and co-borrower name(s)]:
If you are looking for help selling your home and avoiding foreclosure, the federal government has introduced the Home Affordable Foreclosure Alternatives (HAFA) Program to help you. As your mortgage servicer, we are offering you the opportunity to participate in this program by utilizing HAFA’s short sale option.
Home Affordable Foreclosure Alternatives Program – Short Sale
A “short sale” is specifically designed to help borrowers who are unable to afford their first mortgage and want to sell their home to avoid foreclosure, even if the sale price may not pay off the amount owed on their mortgage. A short sale requires a number of parties (you, the buyer, your real estate broker, and sometimes mortgage insurance companies and other lenders) to work together to make this option successful. However, it could be a good solution for your current situation.
How Does a Short Sale Work?
Pre-Sale—we will start by approving a list price for your home or give you the acceptable sale proceeds (the minimum amount that we must receive after sales costs) from the sale of your home. We will also identify the sales costs (broker commissions and closing costs) that may be deducted from the final sales price. You then list your property (like any home sale) with a local real estate broker at the approved price.
Offer—When you get an offer on your home, you will submit the required documentation and we will approve the sale if it is in line with what we agreed to.
Closing—Once the sale closes, we will release you from all responsibilities for repaying your mortgage. Plus, you will receive $3,000 to help pay some of your moving expenses. (The check will be paid to you by the settlement agent as part of the closing.) In the event there is any money left over from the sale after paying the entire amount you owe on the mortgage plus the approved sale costs, you will not be eligible to receive the $3,000.
To Participate in the Short Sale Program
Please note, there is no guarantee that your home will sell under this program, and you are responsible for determining whether you want to sell your home for the price and terms described in this letter. The following pages detail your responsibilities, additional information on the short sale process and the Terms and Conditions. Additionally, this letter constitutes an agreement between us and you (“Agreement”) so please read it carefully and completely.
If you agree to the terms of the Agreement and want to proceed with a short sale, you must complete, sign and return the Agreement back to us. If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number.]
Sincerely,
[Servicer Name]
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Short Sale Program—Your Responsibilities
To Accept This Offer
Please sign and return this Agreement. All owners of the property must sign this Agreement.
Obtain your broker’s signature to acknowledge this Agreement, because your broker plays an important role selling your property. The Short Sale Program sections (pages 2-4) contain important information that you and your broker will need to review and discuss.
Include a copy of your signed listing agreement.
Include information on other liens secured by your home (such as home equity loans, homeowner association liens, tax liens or judgments).
[Insert only if applicable:] Complete and sign the Hardship Affidavit form.
We must have these documents by [insert date 14 calendar days from this request]. Please send us these documents at the following address: [insert servicer address].
You have until [insert date 120 calendar days from the date of this letter] to sell your house. After that date, this Agreement terminates, unless it is extended by us. During this time you have certain responsibilities. You must:
Keep your house and your property in good condition and repair and cooperate with your broker to show it to potential buyers.
[Insert only if applicable:] Make partial mortgage payments of $_________ by the first day of each month beginning on __________ 1, 20___ until your house is sold and title is transferred. While you are selling your house, you still legally owe the full amount of your current monthly mortgage payment. However, as part of this Agreement, we will accept this reduced payment until the house is sold and closes or this Agreement expires. These payments do not constitute a modification of your mortgage.
Be able to provide the buyer of your home with clear title. To start, determine if you have other loans, judgments or liens secured by your home, such as a home-equity line of credit or a second mortgage. If there are such liens, you will need to either pay these loans off in full or negotiate with the lien holders to release them before the closing date. Under this program, you must make sure other lien holders will agree not to pursue other legal action related to the pay off of their lien, such as a deficiency judgment. You can get help from your broker to negotiate with the other lien holders.
We may allow up to 6% of the unpaid principal balance of each loan (not to exceed an aggregate of $6,000 for all the loans in total) to be paid from the sale proceeds to help get a lien release. If you have these types of liens or loans on your home, please gather any paperwork you have (such as your last statement) and send it to us when you return this signed Agreement. Remember, clearing these other liens and delivering clear and marketable title is your responsibility.
At several stages of the short sale process, such as after an offer is received, you will need to complete some paperwork. You are responsible for returning all documents within the time allowed in this Agreement.
If you fulfill these responsibilities, we will postpone any foreclosure sale during the period of this Agreement.
Short Sale Program—Additional Information
You can’t list the property with or sell it to anyone that you are related to or have a close personal or business relationship with. In legal language, it must be an “arm’s length transaction.” If you have a real estate license you can’t earn a commission by listing your own property. You may not have any agreements to receive a portion of the commission or the sales price after closing. Any buyer of your property must agree to not sell the home within 90 calendar days of the date it is sold by you. You may not have any expectation that you will be able to buy or rent [servicer may delete “or rent” in accordance with investor guidelines] your house back after the closing. Any knowing violation of the arm’s length transaction prohibition may be a violation of federal law.
We will need to talk to your broker and others involved in the sale. By signing this Agreement, you are authorizing us to communicate and share personal financial information about your mortgage, credit history, subordinate liens, and plans for relocation with your broker and other third parties that could be involved in the transaction including employees of the United States Treasury and its financial agents, Fannie Mae and Freddie Mac.
The difference between the remaining amount of principal you owe and the amount that we receive from the sale must be reported to the Internal Revenue Service (IRS) on Form 1099C, as debt forgiveness. In some cases, debt forgiveness could be taxed as income. The amount we pay you for moving expenses may also be reported as income. We suggest that you contact the IRS or your tax preparer to determine if you may have any tax liability.
We will follow standard industry practice and report to the major credit reporting agencies that your mortgage was settled for less than the full payment. We have no control over, or responsibility for the impact of this report on your credit score. To learn more about the potential impact of a short sale on your credit you may want to go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
[Insert optional Deed-in-Lieu language if applicable:
If by the termination date of this Agreement, you have complied with all your responsibilities but are unable to sell your home, we will allow you to convey ownership of your home and all real property secured by your mortgage loan (your “Property”). While this action, called a deed-in-lieu of foreclosure, will not allow you to keep your Property, it will prevent you from going through a foreclosure sale and it will release you from all responsibility to repay the mortgage debt. Additionally, you will still be eligible to receive $3,000 to help with your moving expenses.
You and all other occupants must vacate your Property and provide clear and marketable title with a general warranty deed or local equivalent by [insert date at least 30 days after the date of this Agreement]. You must leave the house in broom clean condition, free of interior and exterior trash, debris or damage, and all personal belongings must be removed from the Property. The yard must be clean and neat and you must deliver all the keys and controls, such as garage door openers, to us. You may be required to sign standard pre-closing documents as well as attend a closing of the conveyance of your Property where all borrowers on the mortgage must be present.
You must also be able to deliver marketable title free of any other liens. We will allow up to six percent (6%) of the unpaid principal balance of each subordinate lien, in order of priority, not to exceed $6,000 in aggregate for all subordinate liens, to be deducted from the sale proceeds to pay subordinate lien holders to release their liens. We require each subordinate lien holder to release you from personal liability for the loans in order for the sale to qualify for this program, but we do not take any responsibility for ensuring that the lien holders do not seek to enforce personal liability against you. Therefore, we recommend that you take steps to satisfy yourself that the subordinate lien holders release you from personal liability.
By signing this letter, you are agreeing not only to a short sale but also to a deed-in-lieu of foreclosure if a short sale is not successful. If you have any questions about the deed-in-lieu of foreclosure, please call us before signing and returning this letter.]
Short Sale Program—Receiving/Accepting an Offer
When you receive an offer on your home, within the next 3 business days, you will send us a Request to Approve a Short Sale (RASS) form, a copy of which is attached to this Agreement as Exhibit A1. You will also need to send along a copy of the signed purchase offer and evidence that the buyer has funds to purchase the home, such as a letter that the buyer is approved for a mortgage loan. Within 10 business days of our receipt of these documents, we will approve the sale if it is within the terms and conditions of this Agreement and any other liens are released.
When the sale closes in accordance with this Agreement, we will accept the net sale proceeds (all the funds that remain after the approved sales costs have been paid) in full satisfaction of your mortgage with us and will release you from all future liability.
We hope you decide to take advantage of this short sale option. If you or your broker have any questions about this Agreement please call us at [insert servicer phone number].
If you would like to speak with a counselor about this program, call the Homeowner’s HOPE™ Hotline 1-888-995-HOPE (4673). The Homeowner’s HOPE™ Hotline offers free HUD-certified counseling services and is available 24/7 in English and Spanish. Other languages are available by appointment.
Short Sale Agreement
PLEASE READ THIS AGREEMENT CAREFULLY BEFORE YOU SIGN, BECAUSE IT AFFECTS YOUR LEGAL RIGHTS.
Borrower Acknowledgement of Risks, Conditions and Contingencies. In signing and returning this Short Sale Agreement, I/we agree to all the stated terms and conditions.
| Borrower Signature | Date | Co- Borrower Signature | Date |
| Printed Name | Printed Name | ||
Acknowledgement by Listing Broker
The undersigned listing broker (“Broker”) is not a party of the Short Sale Agreement (“Agreement”) above, but acknowledges that the Broker:
1. Has been retained by the borrower for the sale of the property.
2. Has reviewed the terms and conditions of the Agreement above.
4. Agrees that in the event of a conflict between the terms of the listing agreement and the terms agreed to by the borrower in the Agreement above, the listing agreement will be deemed amended to conform to the terms of the Agreement.
5. Acknowledges that pursuant to the Agreement, the Servicer will not review a sales contract unless a Request for Approval of Short Sale, attached as Exhibit A1, is completed.
| Listing Broker Name | Listing Broker Signature |
| Address: | License #: |
| Office Phone: | |
| Cell Phone: | |
| Date: | E-mail Address: |
If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number].
If you would like to speak with a counselor about this program, call the Homeowner’s HOPE™ Hotline 1-888-995-HOPE (4673). The Homeowner’s HOPE™ Hotline offers free HUD-certified counseling services and is available 24/7 in English and Spanish. Other languages are available by appointment.
| NOTICE TO BORROWERBe advised that by signing this document you understand that any documents and information you submit to your servicer in connection with the Making Home Affordable Program are under penalty of perjury. Any misstatement of material fact made in the completion of these documents including but not limited to misstatement regarding your occupancy in your home, hardship circumstances, and/or income, expenses, or assets will subject you to potential criminal investigation and prosecution for the following crimes: perjury, false statements, mail fraud, and wire fraud. The information contained in these documents is subject to examination and verification. Any potential misrepresentation will be referred to the appropriate law enforcement authority for investigation and prosecution. By signing this document you certify, represent and agree that:” Under penalty of perjury, all documents and information I have provided to Lender in connection with the Making Home Affordable Program, including the documents and information regarding my eligibility for the program, are true and correct.”If you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the Troubled Asset Relief Program, please contact the SIGTARP Hotline by calling 1-877-SIG-2009 (toll-free), 202-622-4559 (fax), or www.sigtarp.gov. Mail can be sent Hotline Office of the Special Inspector General for Troubled Asset Relief Program, 1801 L St. NW, Washington, DC 20220. |
[Name of Servicer] [Name of Borrower]
[Address of Servicer] [Name of Co-Borrower]
[Address of Borrower]
[Loan #]
[Servicer FAX] [Borrower Phone]
[Servicer Email] [Borrower Email]
[Date]
RE: Request for Approval of Short Sale Pursuant to Agreement Dated [Date of SSA]
This is a Request for Approval of the Short Sale Pursuant to Agreement Dated [Date of SSA] between the above referenced Servicer (“Servicer”) and the borrower and co-borrower (“Borrower” or “you”). Under penalty of perjury you certify that:
1) the sale of the property is an “arm’s length” transaction, between parties who are unrelated and unaffiliated by family, marriage, or commercial enterprise;
2) there are no agreements or understandings between you and the Buyer that you will remain in the property as a tenant or later obtain title or ownership of the property;
3) neither you nor the Buyer will receive any funds or commissions from the sale of the property; and
4) there are no agreements or offers relating to the sale or subsequent sale of the property that have not been disclosed to the Servicer.
Please complete, sign and return the Terms of Sale on the following page.
Pre-Foreclosure Specialist Certification – HAMP/HAFA Page 22
| Terms of Sale [All blanks to be completed by Borrower]: | |||||||||||
| 1. Contract Sales Price | $ | 6. Closing Date: | |||||||||
| 2. Less Total Allowable Closing Costs | $ | 7. Approved Buyer(s): | |||||||||
| a. Commissions | $ | ||||||||||
| b. Settlement Escrow/Attorney Fees | $ | ||||||||||
| c. Seller’s Title and Escrow Fees | $ | 8. Settlement Agent: | |||||||||
| d. Subordinate Lien Payoff | $ | ||||||||||
| e. Real Property Taxes | $ | ||||||||||
| f. Real Property Taxes | $ | 9. Settlement Agent’s Address: | |||||||||
| g. Termite Inspection/Repair | $ | ||||||||||
| h. Borrower Relocation Assistance | $ | 3,000 | |||||||||
| i. Other (attach explanation) | $ | ||||||||||
| 3. Net Proceeds to Servicer | $ | ||||||||||
| 4. Earnest Money Deposit | $ | 10. Settlement Agent’s Office Phone: | |||||||||
| 5. Down Payment | $ | 11. Settlement Agent’s Office Fax: | |||||||||
| As required by the Short Sale Agreement, copies of the following documents are attached: Sales contract and all addenda Buyer’s documentation of funds or Buyer’s pre-approval or commitment letter on letterhead from lender | |||||||||||
| The Borrower represents that the information provided in this Request is true and accurate and authorizes theServicer to disclose to the U.S. Department of the Treasury or other government agency, Fannie Mae and/or Freddie Mac any information provided in connection with the Making Home Affordable program. | |||||||||||
|
|||||||||||
| NOTICE TO BORROWERBe advised that by signing this document you understand that any documents and information you submit to your servicer in connection with the Making Home Affordable Program are under penalty of perjury. Any misstatement of material fact made in the completion of these documents including but not limited to misstatement regarding your occupancy in your home, hardship circumstances, and/or income, expenses, or assets will subject you to potential criminal investigation and prosecution for the following crimes: perjury, false statements, mail fraud, and wire fraud. The information contained in these documents is subject to examination and verification. Any potential misrepresentation will be referred to the appropriate law enforcement authority for investigation and prosecution. By signing this document you certify, represent and agree that:” Under penalty of perjury, all documents and information I have provided to Lender in connection with the Making Home Affordable Program, including the documents and information regarding my eligibility for the program, are true and correct.”If you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the Troubled Asset Relief Program, please contact the SIGTARP Hotline by calling 1-877-SIG-2009 (toll-free), 202-622-4559 (fax), or www.sigtarp.gov. Mail can be sent Hotline Office of the Special Inspector General for Troubled Asset Relief Program, 1801 L St. NW, Washington, DC 20220. |
If you would like to speak with a counselor about this program, call the Homeowners HOPE™ Hotline 1-888-995-HOPE (4673). The Homeowner’s HOPE™ Hotline offers free HUD-certified counseling services and is available 24/7 in English and Spanish. Other languages are available by appointment.
If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number.]
To be Completed by Your Servicer
Approval of Short Sale – The Servicer consents to this Request for Approval of Short Sale and agrees to accept all net proceeds from the settlement as full and final satisfaction of the first mortgage indebtedness on the referenced property. This agreement is subject to the following:
A. Terms – The sale and closing comply with all terms and conditions of the Short Sale Agreement between the Servicer and the Borrower as well as all terms and representations provided herein by the Borrower.
B. Changes – Any change to the terms and representations contained in this Request for Approval of Short Sale or the attached sales contract between you and the buyer must be approved by the Servicer in writing. The Servicer is under no obligation to approve such changes.
C. Subordinate Liens – Prior to releasing any funds to holders of subordinate liens/mortgages, the closing agent must obtain a written commitment from the subordinate lien holder that it will release Borrower from all claims and liability relating to the subordinate lien in exchange for receiving the agreed upon payoff amount.
D. HUD-1 – A HUD-1 Settlement Statement, which will be signed by you and the buyer at closing, must be provided to the Servicer not later than one business day before the date indicated in Line 4, Closing Date.
E. Bankruptcy – If you are currently in bankruptcy or you file bankruptcy prior to closing, you must obtain any required consent or approval of the Bankruptcy Court.
F. Tax Consequences – A short payoff of the mortgage may have tax consequences. You are advised to contact a tax professional to determine the extent of tax liability, if any.
G. Credit Bureau Reporting – We will follow standard industry practice and report to the major credit reporting agencies that your mortgage was settled for less than the full payment. We have no control over or responsibility for the impact of this report on your credit score. To learn more about the potential impact of a short sale on your credit you may want to go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
H. Payment Instructions – Payoff funds and a final HUD-1 Settlement Statement must be received by the Servicer within 48 hours of closing in accordance with the attached wiring instructions. [include instructions]
I. Closing Instructions – [include proprietary closing instructions, if any]
If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number.]
| Signature of Servicer Representative | Title |
| Printed Name of Servicer Representative | Date |
To be Completed by Your Servicer
Disapproval of Short Sale – The Servicer disapproves this Request for Approval of Short Sale, for the following reasons (check all applicable reasons):
| | You did not comply with all terms and conditions of the Short Sale Agreement between Servicer and Borrower dated _____/______/_______ as it relates to section/s: __________________________________________________________________________________________________________________________ |
| | The Request for Approval of Short Sale was not complete and/or fully executed.□ Failure to provide executed sales contract or addenda□ Failure to provide buyer’s documentation of funds to close or buyer’s pre-approval or commitment letter on letterhead from lender |
| | The net proceeds available to pay off the first mortgage loan are insufficient, due to:□ Contract sales price is below list price stated in Short Sale Agreement□ Net proceeds amount is less than acceptable net proceeds stated in Short Sale Agreement□ Excessive financial concessions
□ Excessive commissions □ Excessive closing costs □ Excessive payments to subordinate liens/mortgages OR release of subordinate liens did not occur |
| | The mortgage insurer did not approve the short sale. |
| | Other: |
If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number.]
| Signature of Servicer Representative | Title |
| Printed Name of Servicer Representative | Date |
[Name of Servicer] [Name of Borrower]
[Address of Servicer] [Name of Co-Borrower]
[Address of Borrower]
[Loan #]
[Servicer FAX] [Borrower Phone]
[Servicer Email] [Borrower Email]
[Date]
RE: Request for Approval of Short Sale
You have taken an important step toward selling your home and avoiding foreclosure by participating in the federal government’s Home Affordable Foreclosure Alternatives (HAFA) Program. This letter is a Request for Approval of a Short Sale and contains important information.
Read the following pages carefully and complete, sign and return the Terms and Conditions.
If you have not previously contacted us regarding eligibility for a loan modification, you should consider this alternative. Under the Home Affordable Modification Program (HAMP), you may qualify for a modification with affordable and sustainable monthly payments that would allow you to keep your home. Please contact us by [insert date 14 calendar days from date of this request] if you wish to be considered for a loan modification.
If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number.]
Sincerely,
[Servicer Name]
The borrower and co-borrower, if applicable (“Borrower” or “you”), of the above loan contacted the Servicer (“Servicer” or “we”) because your mortgage payments are no longer affordable and you would like to avoid foreclosure. After listing your house for sale, an offer was received. However, the sale may not be sufficient to pay off the loan. This is a Request for Approval of a Short Sale (“Request”) of the subject property, the net sale proceeds from which we agree to accept as the payoff of the mortgage loan even though the proceeds are expected to be less than the full amount due.
Short Sale Program—Terms and Conditions of the Request are as follows:
1. Allowable Costs that May be Deducted from Gross Sale Price
a. Closing Costs. The closing costs paid by you or on your behalf as seller must be reasonable and customary for the market. [Choose one and delete unnecessary text.] [Acceptable closing costs, including the commission, which may be deducted from the gross sale proceeds may not exceed $__________.] OR [Acceptable closing costs, including the commission, which may be deducted from the gross sale proceeds may not exceed ____% of the list price.] OR [Closing costs which may be deducted from the gross sale proceeds are limited to title search and escrow expenses usually paid by the seller; reasonable settlement escrow/attorney’s fees; transfer taxes and recording fees usually paid by the seller; termite inspection and treatment as required by law or custom; pro-rated real property taxes; and, negotiated real estate commissions not to exceed six percent (6%) of the contract sales price [add other closing costs that may be included].]
b. Subordinate Liens. We will allow up to six percent (6%) of the unpaid principal balance of each subordinate lien in order of priority, not to exceed a total of $6,000, to be deducted from the gross sale proceeds to pay subordinate lien holders to release their liens. We require each subordinate lien holder to release you from personal liability for the loans in order for the sale to qualify for this program, but we do not take any responsibility for ensuring that the lien holders do not seek to enforce personal liability against you. Therefore, we recommend that you take steps to satisfy yourself that the subordinate lien holders release you from personal liability.
a. Real Estate Commissions. We will allow to be paid from sale proceeds, real estate commissions as stated in the listing agreement between you and your broker, not to exceed six percent (6%) of the contract sales price, to be paid to the listing and selling brokers involved in the transaction. Neither you nor the buyer may receive a commission. Any commission that would otherwise be paid to you or the buyer must be reduced from the commission due on sale. [Optional text:] Please note: We have retained a vendor to assist your listing broker with the sale. The vendor and your listing broker will work together on your behalf to facilitate the sale process. [Choose one and delete unnecessary text.] [The vendor will be paid from sale proceeds [$ ________] OR [an amount equal to ____% of the sales price]. OR [The vendor will be paid by us outside of the sales transaction.]
b. Borrower Relocation Assistance. If the closing of the short sale occurs in accordance with this Agreement, you will be entitled to an incentive payment of $3,000 to assist with relocation expenses. We will instruct the settlement agent to pay you from the sale proceeds at the same time that all other payments, including the payoff of our first mortgage, are disbursed by the settlement agent. Only one payment per household is provided for the relocation assistance, regardless of the number of borrowers.
2. Property Maintenance and Expenses. You are responsible for all property maintenance and expenses of your home until you convey your Property to us, including utilities, assessments, association dues, and costs for interior and exterior maintenance. Additionally, you must report any and all property damage to us and file a hazard insurance claim for covered damage. Unless insurance proceeds are used to pay for repairs or personal property losses, we may require that they be applied to reduce the mortgage debt.
3. [Insert only if applicable:] Partial Mortgage Payments. Beginning on ___________ 1, 20___, you will be required to make partial mortgage payments of $_________ by the first day of each month during the term of the Request and pending transfer of property ownership. You are legally obligated to make the full amount of
your current monthly mortgage payments. However, we will accept this reduced partial payment until the house is sold or this Agreement expires. The partial mortgage payments do not constitute a modification of your mortgage.
4. Parties to the Sale. The Sales Contract must include the following clauses: “Seller and Buyer each represent that the sale is an “arm’s length” transaction and the Seller and Buyer are unrelated to each other by family, marriage or commercial enterprise.” “The Buyer agrees not to sell the property within 90 days of closing of this sale.”
5. Foreclosure Sale Suspension. We may initiate or continue the foreclosure process as permitted by the mortgage documents; however, we will suspend any foreclosure sale date until the expiration date of this Request or the date of closing of an approved short sale, whichever is later, provided that you abide by its terms and conditions.
6. Satisfaction and Release of Liability. If all of the terms and conditions of this Request are met, upon sale and settlement of the property, we will prepare and send to the settlement agent for recording, a lien release in full satisfaction of the mortgage, foregoing all rights to pursue a deficiency judgment.
7. [Insert only if applicable.] Mortgage Insurer or Guarantor Approval. The terms and conditions of the purchase contract are subject to the written approval of the mortgage insurer or guarantor.
8. Termination of This Request. Unless otherwise agreed by the parties, this Request will terminate on [insert date] if the sale does not close. This Request may be terminated earlier if:
a. You fail to provide all the required documents listed above.
b. Your financial situation improves significantly, you qualify for a modification, you bring the account current or you pay off the mortgage in full.
c. You or your broker fails to act in good faith in closing on the sale of the property or otherwise fails to abide by the terms of this Request.
d. A significant change occurs to the property condition or value.
e. There is evidence of fraud or misrepresentation.
f. You file for bankruptcy and the Bankruptcy Court declines to approve the Request.
g. Litigation is initiated or threatened that could affect title to the property or interfere with a valid conveyance.
h. [Insert only if applicable:] You do not make the payments required under this Request.
9. Settlement of a Debt. The proposed transaction represents the Servicer’s attempt to reach a settlement of the delinquent mortgage. You are choosing to enter into this transaction even though there is no guarantee that the transaction will be successful. In the event this transaction is unsuccessful, the Servicer may exercise all remedies under the mortgage, including foreclosure.
Under penalty of perjury, you certify that:
1. the sale of the property is an “arm’s-length” transaction, between parties who are unrelated and unaffiliated by family, marriage, or commercial enterprise;
2. there are no agreements or understandings between you and the Buyer that you will remain in the property as a tenant or later obtain title or ownership of the property;
3. neither you nor the Buyer will receive any funds or commissions from the sale of the property; and
4. there are no agreements or offers relating to the sale or subsequent sale of the property that have not been disclosed to the Servicer.
| 1. Contract Sales Price | $ | 6. Closing Date: | |
| 2. Less Total Allowable Closing Costs | $ | 7. Approved Buyer(s): | |
| a. Commissions | $ | ||
| b. Settlement Escrow/Attorney Fees | $ | ||
| c. Seller’s Title and Escrow Fees | $ | 8. Settlement Agent: | |
| d. Subordinate Lien Payoff | $ | ||
| e. Real Property Taxes | $ | ||
| f. Real Property Taxes | $ | 9. Settlement Agent’s Address: | |
| g. Termite Inspection/Repair | $ | ||
| h. Borrower Relocation Assistance | $ | 3,000 | |
| i. Other (attach explanation) | $ | ||
| 3. Net Proceeds to Servicer | $ | ||
| 4. Earnest Money Deposit | $ | 10. Settlement Agent’s Office Phone: | |
| 5. Down Payment | $ | 11. Settlement Agent’s Office Fax: | |
As required by the Short Sale Program, copies of the following documents are attached:
Signed Request;
Copy of a signed listing agreement with a real estate broker, if applicable;
Executed copy of the sales contract and all addenda;
Buyer’s documentation of funds or Buyer’s pre-approval or commitment letter on letterhead from a lender;
Information about other liens secured by your home such as home-equity loans;
[Insert only if applicable:] Completed and signed Hardship Affidavit form; and
Servicer must have these documents no later than [insert date 14 calendar days from date of this request] or we will not be able to respond to this request. Please send us these documents at the following address: [insert servicer address].
The Borrower represents that the information provided in this Request is true and accurate and authorizes the Servicer to disclose to the U.S. Department of the Treasury or other government agency, Fannie Mae and/or Freddie Mac any information provided in connection with the Making Home Affordable program.
| Borrower Signature | Date | Co- Borrower Signature | Date |
| Printed Name | Printed Name | ||
| NOTICE TO BORROWERBe advised that by signing this document you understand that any documents and information you submit to your servicer in connection with the Making Home Affordable Program are under penalty of perjury. Any misstatement of material fact made in the completion of these documents including but not limited to misstatement regarding your occupancy in your home, hardship circumstances, and/or income, expenses, or assets will subject you to potential criminal investigation and prosecution for the following crimes: perjury, false statements, mail fraud, and wire fraud. The information contained in these documents is subject to examination and verification. Any potential misrepresentation will be referred to the appropriate law enforcement authority for investigation and prosecution. By signing this document you certify, represent and agree that:” Under penalty of perjury, all documents and information I have provided to Lender in connection with the Making Home Affordable Program, including the documents and information regarding my eligibility for the program, are true and correct.”If you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the Troubled Asset Relief Program, please contact the SIGTARP Hotline by calling 1-877-SIG-2009 (toll-free), 202-622-4559 (fax), or www.sigtarp.gov. Mail can be sent Hotline Office of the Special Inspector General for Troubled Asset Relief Program, 1801 L St. NW, Washington, DC 20220. |
To be Completed by Your Servicer
Approval of Short Sale – The Servicer consents to this Request for Approval of Short Sale and agrees to accept all net proceeds from the settlement as full and final satisfaction of the first mortgage indebtedness on the referenced property. This approval is subject to the following:
A. Terms – The sale and closing comply with all terms and conditions of the Request as well as all terms and representations provided herein by the Borrower.
B. Changes – Any change to the terms and representations contained in the Request or the attached sales contract between you and the buyer must be approved by the Servicer in writing. The Servicer is under no obligation to approve such changes.
C. Subordinate Liens – Prior to releasing any funds to holders of subordinate liens/mortgages, the closing agent must obtain a written commitment from the subordinate lien holder that it will release Borrower from all claims and liability relating to the subordinate lien in exchange for receiving the agreed upon payoff amount.
D. HUD-1 – A HUD-1 Settlement Statement, which will be signed by you and the buyer at closing, must be provided to the Servicer not later than one business day before the date indicated in Line 4, Closing Date.
E. Bankruptcy – If you are currently in bankruptcy or you file bankruptcy prior to closing, you must obtain any required consent or approval of the Bankruptcy Court.
F. Tax Consequences – A short payoff of the mortgage may have tax consequences. You are advised to contact a tax professional to determine the extent of tax liability, if any.
G. Credit Bureau Reporting – We will follow standard industry practice and report to the major credit reporting agencies that your mortgage was settled for less than the full payment. We have no control over or responsibility for the impact of this report on your credit score. To learn more about the potential impact of a short sale on your credit you may want to go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
H. Payment Instructions – Payoff funds and a final HUD-1 Settlement Statement must be received by the Servicer within 48 hours of closing in accordance with the attached wiring instructions. [include instructions]
I. Closing Instructions – [include proprietary closing instructions, if any]
If you have questions, please contact us directly between the hours of [insert hours] at [insert toll free number.]
| Signature of Servicer Representative | Title |
| Printed Name of Servicer Representative | Date |
To be Completed by your Servicer
Disapproval of Short Sale – The Servicer disapproves this Request for Approval of Short Sale, for the following reasons (check all applicable reasons):
| | You did not comply with all terms and conditions of the Request for Approval of Short Sale as it relates to section/s: __________________________________________________________________________________________________________________________ |
| | The Request for Approval of Short Sale was not complete and/or fully executed.□ Failure to provide executed sales contract or addenda□ Failure to provide buyer’s documentation of funds to close or buyer’s pre-approval or commitment letter on letterhead from lender |
| | The net proceeds available to pay off the first mortgage loan are insufficient, due to:□ Contract sales price is below list price stated in Short Sale Agreement□ Net proceeds amount is less than acceptable net proceeds stated in Short Sale Agreement□ Excessive financial concessions
□ Excessive commissions □ Excessive closing costs □ Excessive payments to subordinate liens/mortgages OR release of subordinate liens did not occur |
| | The mortgage insurer, investor or guarantor of the loan did not approve the short sale. |
| | Other: |
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