Starting November 1, 2012, if you loan is serviced by Fannie Mac or Freddie Mac, you will not have to receive approval from the mortgager insurer to proceed with a short sale.  Typically, if a homeowner purchases a home and their down payment is less than 20% of the fair market value of the property, the homeowner is required to purchase private mortgage insurance.  The private mortgage insurance provides a safety net to the lender in the case of default.  If a homeowner defaults on a mortgage, the lender could seek  insurance proceeds to cover a portion of this loss from the private mortgage insurance.  As a result of this ability to collect insurance proceeds from the private mortgage insurer in the event of a default, mortgage insurers had the authority to deny a short sale.  However, starting November 1, 2012, under new short sale guidelines for all loans serviced by Fannie Mac and Freddie Mac, mortgage insurers will allow a short sale or deed in lieu without their approval.  What this means is one less step in the short sale process, which hopefully will lead to faster closings.

-Randy M. Creighton

Tagged with:

In a recent news release, The Federal Housing Financing Agency gave word of new short sale guidelines for Fannie Mae and Freddie Mac servicers.  The changes are set to go into affect November 01, 2012 and are meant to clarify and expedite the short sale process.  The announced alterations are as follows:

1)      Homeowners with a Fannie Mae or Freddie Mac mortgage will be permitted to sell their home in a short sale even if they are current on their mortgage if they have an eligible hardship, such as death of a borrower or co-borrower, divorce, disability, or relocation for a job, unemployment, business failure, etc., all without special approval from Fannie Mae or Freddie Mac;

2)      Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes, whereby servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale;

3)      Special treatment will be provided to military personnel with Permanent Change of Station (PCS) orders; and

4)      Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.

All of the changes hint to incredible strides forward for borrowers, especially the provision that indicates borrowers will be considered without default and the limit on contributions to second lien holders.  They are claimed to create a single, uniform short sale procedure, with specific rules or timelines when a foreclosure sale is looming. Borrowers that short sell will not be eligible for a Fannie Mae or Freddie Mac loan for two years thereafter.

Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to: or calling 800-7Fannie (8 am to 8 pm ET) or 800-Freddie (8 am to 8 pm ET)

Kristy Black, JD MBA

Can HARP Help?

The Home Affordable Refinance Program (“HARP”) is a federal program supported by the Obama administration which can help homeowners refinance their underwater properties.  However, there are a couple major hurdles that homeowners must pass before being considered for the program.  First, the homeowner’s loan must be with Fannie Mae or Freddie Mac.  To determine this, simply go to either Fannie or Freddie’s websites or go to for easy links to both.  Second, the loan must have been acquired by either Fannie Mae or Freddie Mac before June of 2009 which a major sticking point for many homeowners.  This may not be as big a problem since most homeowners were not able to qualify for a loan until after that time.

Essentially, HARP refinances a homeowner’s existing loan using interest rates to match current market values. While there is no principal reduction option, the remaining balance of the loan becomes incorporated into the new loan at the lower interest rate.  A term of 30 years at a fixed rate would achieve the lowest monthly payment possible but 20 and 15 year terms are available as well.

Therefore, homeowners who are underwater that want to say in their homes should consider the HARP program as a way to start their loans over “from scratch.”

Tisha Black Chernine, Esq.


Black & LoBello on the Radio

Click here to listen to the Legal Hour on KDWN AM720 from March 21st, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Mark Baker from Sierra Pacific Mortgage.  Ms. Black Chernine and Mr. Baker discuss what the HARP program does and how it can help people (1:50), the limits to the  HARP (12:45), the pros and cons of strategic default vs. short sale (16:45), financing reverse-mortgages (29:50), why Bank of America no longer works with Fannie Mae (31:50) and the Shared Appreciation Modification Program (34:40).

Please tune in to AM720 KDWN’s “Legal Hour,” Wednesdays, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

Freddie Mac CEO Charles “Ed” Haldeman gave a strong signal Friday that new incentives from the Treasury Department may be enough to start principal reduction on mortgages backed by the government-sponsored enterprises.

To read the full article, click here.

So where does the Multi-State Settlement (“MSS”) leave Nevadans? Essentially, in a slightly better position IF, and only IF, we manage our expectations, pay attention and do our homework. If we do these things we may be able to collect all the money allocated to us, pursue the “banksters” criminally and pursue our individual remedies under state and Federal laws.  To begin you must do the following:

Determine who owned/owns the Note.

It is expected to take somewhere between 60 and 90 days to set up the MSS infrastructure and to commence delivery of the forms associated with the “opt-in” portion of the program. During that time, borrowers who were foreclosed upon, still making payments or are still in default should take measures to determine who owned, claims to own or currently owns their note. They can do this by searching the Fannie Mae and Freddie Mac websites, sending out a Truth-in-Lending letter and contacting the servicer related to their loan. There is generally a service number located on all mortgage invoices. Nevada is not a “show me the note” state. We do require that claimant lenders can produce proof of the right to collect on the Note. However, they are NOT required to produce the actual note. A certified copy thereof will do. Accordingly, you will want to look at who is making those certifications. Check the endorsements on the note, to whom the note is endorsed (this is a technical bearer/order distinction that may be important to a lawyer) and the manner in which the note was endorsed - on the note itself or by a separate paper. All of these things matter and may be changed or altered by the Bank or other party at a later date. Gathering them NOW is important and prudent.

Determine who owned/owns the Deed of Trust.

In addition to researching the note the borrower should determine who is or has foreclosed upon (all that apply) their Deed of Trust. In a series of opinions regarding mediation and transfer of beneficial interest in Notes and Deeds of Trust the Nevada Supreme Court has given very clear instructions on how and what constitutes a proper transfer of the Deed of Trust. Therefore, Borrowers should endeavor to ensure that any claimed creditor pursuing them under a Deed of Trust has the proper documentation to support its claims. Borrowers can research this information by sending a TILA letter, researching their MERS MIN number or looking through public notices and recorded documents. Deeds of Trust should be transferred by assignment. The date of the transfer in relation to other occurrences such as the commencement of the foreclosure process and filings by trustees can have a big impact on whether or not the foreclosure was done properly and by the proper party.

Review the County Recorder’s page and your title chain.

Nevadans should also review the Recorder’s page on their past, present and future properties. Oftentimes, you can collect information regarding transfers, find robo-signers, false dates, false names and botched documents in the public record. Singularly and in the aggregate, these types of facts can add up to leverage in a short sale, decrease in a deficiency or a lawsuit under various Federal and state laws. Moreover, look at the trustee’s deeds to determine if the property has been foreclosed upon. Make sure the listed beneficiary matches those in the chain.   Notably, a recent Massachusetts Supreme Court denied a quiet title claim of a purchaser at a botched foreclosure. Examining these records closely when seeking to purchase a property may avoid title issues in the future.

Review your mortgage statements, credit reports and other records.

There are many Federal and state protections for borrowers who have been subjected to misapplied mortgage payments, false credit reports, force placed insurance, doubled fees (such as BPO charges or “site inspections”) and bogus charges. Look at your statements as suspect. Even small accounting errors can garner decent statutory fines in your favor. You can order an accounting of these things by sending a Qualified Written Request to your lender or servicer. You are also required to have received notice ANYTIME your mortgage was transferred. This notice is to have been provided within 30 days of the transfer.  You may have a fine waiting for you to collect if you did NOT get it, like many other little known statutes.

Read, read, read!

The big secret is that people, including banks, do not read their documents. Before you sign, look for waivers and releases in EVERYTHING and understand what they mean even if you have to see an attorney. Read the small print, large print, things in boxes and regular paragraphs. Determine who the parties are and the obligations of each. Think of the worst case scenario and make sure the document addresses what would happen in that event. Look for the small charges that will be taken from you such as processing charges, documentation charges, copy costs, interest for no reason, penalties that are not penalties, pencil sharpening, etc. and know when they will be allocated. You are your own watch dog. If it looks strange, sounds funny or gives you a “gut-check,” look into it. If you are not certain, find COMPETENT people to assist you based on sound in-person referrals, not a suggestion from a stranger, the internet or a flashing advertisement.

Be diligent.

Pay attention regardless of whether you paid your mortgage. Research the MSS, opt-in if you qualify, know who your lender is and the programs they offer. Investigate your property, examine your title and know your rights. If someone or some company owes you a deadline, make sure you remind them the DAY it is late. Be timely yourself. Follow the directions and keep copies of everything, including whom you talked to, when and if they called you or you called them. This is, in large part, a game of attrition. Know what to expect and ensure that the people you rely on professionally and politically act and vote appropriately.

Finally, manage your expectations.

Steel yourself to the fact that you must make an effort. There are no silver bullets. This is not an era where one can rely on others for good advice, clear direction or protection. Above all else, hold on because this ride is nowhere near over and the rules to this game seem to change every day.

Tisha Black Chernine, Esq.

Wall Street knew all of the mortgages were bad when they created or bought and sold them. Furthermore, they knew the warranties of quality they made regarding the caliber of the loans, whether to the certificate purchasers of the Residential Mortgage Backed Securities (“RMBS”) pools or the Government Sponsored Entities (“GSE”), were meaningless when they made them. It did not take hindsight to determine that those pools should not have been rated “AAA.”

Fannie Mae and Freddie Mac knew that the related documentation and the serving records were problematic for over a decade.  The Federal Government has also known of the problems as evidenced by consent orders signed over a year ago by 14 of the major servicers. They promised then to do what should have been done all along: abide by laws and sound business practices.

Congress knows. The Senators know. The Attorneys General are aware. Countless committees, reports, investigations and press releases cite the blasphemous practices and unconscionable conduct of the industries related to real estate and its financing. Each have blustered “something must be done,” “what an outrage,” “vote for me, I will change all of this.”

Borrowers also knew it was too good to be true.  Even if they did not have to produce documents to support stated income on mortgage applications, they knew that the applications were often falsified by originators who would never have any “skin in the game” of the debt roulette they were playing.

Is there anyone left who can claim ignorance that our mortgage market from start to foreclosure is rife with fraud, felons, misfits and idiots? Ironically, everyone claims it is someone else’s fault and that some other party should suffer the finger-pointing and scaffold. Poppykosh!

This dreadlock of mortgage morass, main street malaise and political uselessness has been twisting up for decades. The notion that it can be undone with the stroke of a pen is just that, a notion. You cannot be fit without discipline. You cannot cure lethargy without energy and you cannot fix systemic corruption and the real estate market with the Multi-State Settlement.

The Multi-State Settlement (“MSS”) involves every state, save and except Oklahoma.  The MSS was entered into by the participating states and the following five major lenders (“Banks”):

  1. Bank of America $11.82 Billion (who holds the Countrywide loans that were not sold);
  2. Wells Fargo $5.35 Billion;
  3. Ally Financial $310 Million (formerly GMAC);
  4. JP Morgan Chase $5.29 Billion; and
  5. CitiCorp $2.2 Billion.

However, the Banks are not the only beneficiaries of the MSS for there is a release that includes their subsidiaries, affiliates and related entities, regardless of whether the subsidiaries to these companies are past, present or (presumably) acquired in the future.  The net is cast quite far and wide in terms of Bank releases. The activities covered are similarly endless. However, they are listed as the acts or failures that relate to origination, servicing and foreclosure; the entire mortgage process.

Who, besides Banks and offending entities, were eager to see the settlement executed? None other than the Department of Justice (whom we pay to peruse and convict criminals, not settle with them); the Federal Reserve Board; the Conference of State Bank Supervisors; the Federal Housing Finance Authority (Freddie and Fannie Regulator); and the HUD. Many of these players have filed, pursued or exacted their own settlements with the Banks.

It is also interesting to note which states’ Attorneys General and federal actors were involved in the committee that put the proposed settlement together. It shall be interesting as well to watch these individuals get federal or other coveted appointments in the future.

  1. Pam Bondi, Florida Attorney General
  2. Tom Miller, Iowa Attorney General
  3. Eric Holder, U.S. Attorney General
  4. Sean Donovan, U.S. Secretary of Housing & Urban Development
  5. Lisa Madigan, Illinois Attorney General

It will also be these “civic-minded” individuals that lead the MSS complaint/compliance committee. You should be asking yourself now whether these individuals are the best suited for the continued oversight and enforcement of this program as they were the very soft-heeled ones to come up with it.

Despite being cash-strapped and eager to receive an infusion of capital to cover budget shortfalls (like many other states in the Union) the following states were hold-out states, true hold-out states. They actually worked out a more advantageous deal for their constituents.

  1. Arizona
  2. California
  3. Delaware
  4. Massachusetts
  5. New York
  6. Nevada
  7. Oklahoma (never signed on to MSS, but took the hard money and not the opportunity for write-downs).

The states’ Attorneys General were forced to choke down the MSS much like a goose making pate for bankers. Thankfully, Nevada managed to secure a better settlement than most, and so we should have, as we are the hardest hit state.

Tisha Black Chernine, Esq.

Black & LoBello on AM720 KDWN

Tune in as Black & LoBello offers free legal advice on a wide range of topicsClick here to listen to the Legal Hour on KDWN AM720 from January 4th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses recent case law regarding homeowners’ right to sue lenders under HAMP or HAFA (2:40), how to dispute NODs (4:05), the book Chasing Goldman Sachs by Suzanne McGee and what it says about how Fannie Mae and Freddie Mac operate and other controversies of the current economic crisis (10:16)(23:00)(38:02), how to deal with bank lawsuits (12:50), refinancing an underwater property with Fannie Mae (19:00), how the securitization process avoids taxes (33:55) and how AB 273 can protect homeowners from being pursued by banks (32:56).

Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

President Obama Announces Improvements to HARP

Obama Announces Improvements to HARPThe Obama Administration, by way of the Federal Housing Finance Agency (FHFA), announced a major upgrade to the Making Homes Affordable Refinance Program (HARP).  This program is designed to help homeowners who owe more on their mortgage than the home is worth, so-called “underwater” mortgages.  Homeowners of underwater homes cannot refinance their loans because lenders will not write a loan that is under-collateralized, meaning, they can’t sell the home to recover the amount of the loan because the house is not worth the amount of the new loan.  Therefore, untold thousands of homeowners cannot take advantage of today’s historically low interest rates to refinance their existing mortgages.

The HARP  was designed to assist underwater homeowners by providing a government subsidy and incentive to lenders to persuade lenders to make loans.  The HARP provides incentives directly to the banks to motivate them make loans.  The FHFA claims that it has helped 900,000 underwater homeowners refinance their loans.

The new HARP rules are designed to increase the number of loans by waiving some fees and penalties to make the cost lower for homeowners and waiving some requirements for appraisals.  The changes are designed to lower costs for banks and homeowners.  The HARP program has been extended to December 2013 for eligible loans.

The eligibility requirements for HARP are:

  • The existing mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. Homeowners can determine if they have a Fannie Mae loan by clicking here or calling 800-7FANNIE from 8 AM to 8 pm ET.  For Freddie Mac loans click here or call 800-FREDDIE  from 8 am to 8 pm ET.
  • The program will continue to be available for loans with Loan to Value Ratios above 80 percent.
  • Borrowers must be current on their mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.
  • Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances.

The loan to value ratio continues to be a major hurdle for most Nevada homeowners that disqualify them from HARP.  The 80% LTV means that a house cannot have lost 20% (or more) of its value.  As most homes in Nevada have lost astronomical levels of value, some over 50%, HARP remains a program that may help Nevadan’s out of state friends and relatives but will not be of much help locally.

Carlos L. McDade, Esq.

Black & LoBello on the Radio

Click here to listen to the Legal Hour on KDWN AM720 from September 7th, 2011 in which Managing Partner, Tisha Black Chernine, Esq., discusses the lawsuit between Fannie Mae and Freddie Mac and 17 major banks and the arguments on either side, the Nevada Homestead Act, refinancing home loans and modification options, consumer rights under the Debt Collections Practices Act, loan ownership investigations, deed in lieu programs and the effects of a short sale vs. foreclosure.

Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

HARP Program Extended Through June 2012

If you are one of the few Nevada residents that is current on your mortgage and you are seeking a loan modification, good news! The Federal Housing Finance Agency has extended the Home Affordable Refinance Program to June 30, 2012. The program allows homeowners  with loans administered by Fannie Mae or Freddie Mac, who are current on their loans and whose loan-to-value rations are between 80 and 125 percent, to finance to a lower loan rate.  Given that Nevadans suffer with negative equity averaging more than 60%, this program is not likely to be of much assistance in our state.  However, if you are one of the few that can qualify, getting a lower interest rate (and perhaps, a small principal reduction of up to 5%) is worth pursuing.

Tisha Black Chernine, Esq.

The Obama administration released its “white paper” outlining the winding down and replacement of Fannie Mae and Freddie Mac.  The goal of the proposals is to decrease the government’s involvement in the mortgage industry.  The first proposal presented by the administration would create a government backstop under a federal reinsurance model.  In the second proposal the government backstop would only be triggered in event of a crisis.  The last option presented has no government backstop beyond existing federal agencies such as the Federal Housing Administration (FHA).

The paper also proposes reforming the current industry standards. The paper recommends raising the fees that Fannie and Freddie charge to lenders in order to make mortgages that are not government-backed more competitive.  Another proposal includes a gradual increase in minimum down payments so that Fannie and Freddie can buy loans with a minimum 10% down payment.  Lastly, the paper recommends slowly reducing the maximum loan limits Fannie and Freddie can purchase but does not specify to exact loan limits.

As part of the recommended reforms to the current mortgage industry, the paper also recommends reducing the role and financial exposure of the FHA. The administration says it will increase the annual insurance premiums borrowers of FHA backed loans pay later this year.  The administration is concerned with phasing in any reform gradually to prevent increased chaos in the fragile mortgage and housing market.

Joshua D. Carlson, Esq.

Pursuant to the new guidelines released December 28, 2010, servicers are expected to put into place the revised guidelines on or before February 1, 2011.  As a part of the updated guidelines servicers are now required to complete and send a Short Sale Agreement (SSA) to the borrower within 30 calendar days from the date the borrower responds to the HAFA solicitation. If the borrower requests HAFA consideration, the servicer must respond within 30 days.

Another major change under the revision is the removal of the HAFA requirement that the borrower must occupy the home.  Now, a borrower who no longer lives in the property is eligible for HAFA as long as the property has been vacant or rented to a non-borrower for no more than 12 months prior to the date of the SSA and the borrower has not purchased a new property during the 12 month period prior to the SSA.

Servicers are no longer required to verify a borrower’s financial information to determine a borrower’s HAFA eligibility, nor is it necessary to determine if the borrower’s total monthly mortgage payment is more than 31 percent of monthly gross income.  Servicers are also are no longer limited by the 6 percent cap with respect to payments to the subordinate lien holders.

While the above mentioned revision to the HAFA guidelines are in the right direction, 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.

Joshua D. Carlson, Esq.

The Obama administration is trying to convince Fannie Mae and Freddie Mac to join a program run by the Federal Housing Administration (FHA) that allows banks to hand over mortgages if the bank and investors agree to a write-down on the principal.  The administration hopes that the participation of the mortgage giants would put additional pressure on other lenders to participate in the FHA program.

Currently, Freddie and Fannie rarely reduce principal balances.  According to the Office of the Comptroller of the Currency, only 10 of the 120,000 loans modified during the second quarter of 2010 came with a principal reduction.  It is of note that the FHA program is only available to homeowners who are current on their mortgage.

Joshua D. Carlson, Esq.

Freddie Mac  and Fannie Mae  are postponing foreclosure evictions on mortgage loans they own or back from December 20th to January 3rd.

Wells Fargo will freeze foreclosure sales for the holiday.  The lender’s freeze will run the same two week period as that of Fannie Mae and Freddie Mac.  It will only postpone sales of home loans that it owns.  For other loans that it only services, that are owned by others (“owners” or “ investors”), it will only postpone sales if authorized by the investor.

Bank of America may postpone foreclosure sales  on loans it owns or that  are owned by investors that give the bank delegated authority to act.   Like Wells Fargo, Bank of America will postpone sales of homes whose loans are held by investors only if authorized by the investor.

Carlos L. McDade, Esq.

What Will Replace Fannie and Freddie?

With the recent election results and the increase in Republican politicians promising to abolish Fannie Mae and Freddie Mac, the topic of what will replace these government sponsored entities is being discussed now more than ever.   Fannie and Freddie have been in a state of uncertainty since the government seizure but a recent Wall Street Journal article appropriately asked what would replace them.

Fannie and Freddie played key roles in the prevalence of 30-year fixed rate mortgages by purchasing these loans from banks who liked to have them off their books.  Fannie and Freddie guaranteed the loans the loans they purchased and sold them to investors as securities.  According to a recent report by Standard & Poor’s, however, the cost to rescue Fannie and Freddie could reach $280 billion.  The cash necessary to keep Fannie and Freddie active does not compare to the projected $400 billion in capitalization that would be required for any entities replacing these two failing entities.

Mortgage investors, industry groups, and academics are currently putting their support behind government insurance for mortgages.  Treasury Secretary Geithner supports a limited, but explicit, guarantee.  Conversely, Representative Jeb Hensarling (R., Texas), disagrees stating that he did not see the reason for continued government guarantees and the use of 30-year fixed mortgages.  Furthermore, Hensarling pointed out that other countries have succeeded in producing high-homeownership rates without government guarantees.  Many other Republicans call for complete privatization of the housing-finance industry.

Joshua D. Carlson, Esq.

A joint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners.  To read the full article please click this link.

At the end of August, Lender Processing Services (LPS) reported that mortgages on 4,947,000 properties nationwide were at least 30 days past due but NOT in foreclosure. Of those, 2,374,000 were 90 or more days delinquent.   The good news is that the delinquency rate of loans that are 30 days or more past due have declined one percent since last month and 5.1 percent since this time last year.

Even with the high number of delinquencies, the number of bank-owned properties has fallen steadily over the past year.  There are several possible reasons for the lack of bank-owned properties even with the near record-high delinquency rates.  First, a portion of the delinquent loans ends up being permanently modified.  Second, banks are approving short sales with greater regularity even though the short sale process is still filled with frustration and confusion.  Lastly, when foreclosures do occur, more investors are buying properties at foreclosure sales preventing these properties from ending up as REO.

Currently, Fannie Mae and Freddie Mac make up a large majority of foreclosure listings.  Fannie and Freddie have already taken back nearly as many homes in the first half of the year as they did all of last year. As of June 2010, they owned more than 191,000 homes which is nearly double the total from 2009.

Joshua D. Carlson, Esq.

Tagged with:

The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to delist their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange.  To read the full article on, click here.

Government sponsored entities (GSE), Fannie Mae and Freddie Mac, both issued new guidelines to servicers on June 1.   The new stipulations allow homeowners with GSE owned or guaranteed loans to pursue a short sale or deed-in-lieu of foreclosure if they are unable to secure a modification under the Home Affordable Modification Program (HAMP) program.  Both Fannie Mae and Freddie Mac encouraged servicers to begin implementing their short sale and deed-in-lieu procedures “immediately.”  By August 1, all Fannie Mae and Freddie Mac servicers must incorporate Home Affordable Foreclosure Alternative (HAFA) into their operations and offer HAFA solutions such as short sale and deed-in-lieu options to eligible borrowers.  

Like the original HAFA guidelines, Fannie and Freddie loans must first be found eligible for HAMP.  If borrowers fail to fulfill HAMP obligations, a HAFA short sale or deed-in-lieu will be offered.  Unlike the non-GSE HAFA program, Fannie and Freddie stipulate that HAFA can be applied only after “all other home retention workout options have been exhausted.” 

Servicers must start using Fannie Mae’s HAFA guidelines for all conventional mortgage loans held in Fannie Mae’s portfolio that are part of a mortgage-backed securities (MBS) pool with the special servicing option or that are part of a shared-risk MBS pool for which Fannie Mae markets the acquired property.  Freddie Mac’s HAFA guidelines apply to all “first-lien mortgages owned, guaranteed, or secured by Freddie Mac that were originated on or before January 1, 2009.” 

Under the recently raised HAFA payouts, borrowers who successfully complete a HAFA short sale or deed-in-lieu will receive a $3,000 relocation assistance payout. 

Joshua D. Carlson, Esq.

Page 1 of 212