$3 billion additional assistance for jobless homeowners

August 17, 2010

On August 11, 2010, the Obama Administration announced additional support to help homeowners struggling with unemployment through two targeted foreclosure-prevention programs.

Through the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (HFA Hardest Hit Fund), the U.S. Department of the Treasury will make $2 billion of additional assistance available for HFA programs for homeowners struggling to make their mortgage payments due to unemployment. Additionally, the U.S. Department of Housing and Urban Development (HUD) will soon launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance – for up to 24 months – to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.

“HUD’s new Emergency Homeowner Loan Program will build on Treasury’s Hardest Hit initiative by targeting assistance to struggling unemployed homeowners in other hard hit areas to help them avoid preventable foreclosures,” said Bill Apgar, HUD Senior Advisor for Mortgage Finance. Together, these initiatives represent a combined $3 billion investment that will ultimately impact a broad group of struggling borrowers across the country and in doing so further contribute to the Administration’s efforts to stabilize housing markets and communities across the country.”

Hardest Hit Fund

President Obama first announced the HFA Hardest Hit Fund in February 2010 to allow states hit hard by the economic downturn flexibility in determining how to design and implement programs to meet the local challenges homeowners in their state are facing.

Under the additional assistance announced, states eligible to receive support have all experienced an unemployment rate at or above the national average over the past 12 months. Each state will use the funds for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training.

States that have already benefited from previously announced assistance under the HFA Hardest Hit Fund may use these additional resources to support the unemployment programs previously approved by Treasury or they may opt to implement a new unemployment program. States that do not currently have HFA Hardest Hit Fund unemployment programs must submit proposals to Treasury by September 1, 2010 that, within established guidelines, meet the distinct needs of their state.

The states eligible to receive funds through this additional assistance, along with allocations based on their population sizes, are as follows:

Alabama $60,672,471
California $476,257,070
Florida $238,864,755
Georgia $126,650,987
Illinois $166,352,726
Indiana $82,762,859
Kentucky $55,588,050
Michigan $128,461,559
Mississippi $38,036,950
Nevada $34,056,581
New Jersey $112,200,638
North Carolina $120,874,221
Ohio $148,728,864
Oregon $49,294,215
Rhode Island $13,570,770
South Carolina $58,772,347
Tennessee $81,128,260
Washington, DC $7,726,678

HUD Emergency Homeowners Loan Program

This new program will complement Treasury’s HFA Hardest Hit Fund by providing assistance to homeowners in hard hit local areas that may not be included in the hardest hit target states. Those areas are still being determined.

The program will work through a variety of state and non-profit entities and will offer:

  • a declining balance
  • deferred payment “bridge loan” (0% interest, non-recourse, subordinate loan) for up to $50,000 on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.

Under the program, eligible borrowers must:

  • Be at least 3 months delinquent in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within 2 years;
  • Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home;
  • Demonstrate a good payment record prior to the event that produced the reduction of income.

HUD will announce additional details, including the targeted communities and other program specifics when the program is officially launched in the coming weeks.

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Bank of America Short Sale Process Presentation

April 19, 2010

 

 On April 8, 2010, Bank of America (BOA) executives held a webinar presentation for over 10,000 Realtors to discuss BOA’s short sale process.

Tip: Refer to the Equator Agent/Homeowner Guide for step-by-step instructions 

Summary

10 Tips to Avoid Delays in Processing Time

  1. Review all documents and images for accuracy prior to uploading in Equator
  2. Ensure that property is listed in the MLS
  3. Negotiate external party fees prior to submission of HUD-1
  4. Supply HUD-1 that is valid for at least 60 days
  5. Ensure that agent and customer tasks are completed as timely as possible in Equator (i.e. accepting short sale assignment, submitting short sale offer, and uploading offer documents within 7 days)
  6. Only submit fully executed purchase offers with all appropriate addendums signed by both buyer and homeowner
  7. Work to get purchase offer representing the best possible fair market value and highest net proceeds for the lender
  8. Set appropriate expectations with buyers/sellers so they understand the complexity and resulting length of time a short sale can take
  9. Work to get a release on outside liens as early as possible
  10. The following situations will cause delays: (1) Change in buyer or agent at any time during the process; (2) Customer files bankruptcy; (3) Deal change after the approval letter is issued

Steps Already Taken to Improve the Short Sale Process

  • Increased staffing and updated training
  • Dedicated Short Sale Call Center:  1-866-880-1232
  • Hours of Operation: 8 AM – 9PM (EST), Monday -Friday
  • Extended Saturday hours – Coming Soon!
  • Equator – primary tool for initiating the short sale
  • Changed procedures to improve associate responsiveness
  • Enhanced the procedure to proactively provide loan status

Steps Underway to Enhance Programs

Home Affordable Foreclosure Alternatives (HAFA):

  • Implemented on April 5, 2010 and are following the HAFA guidelines 
  • HAFA is first in short sale waterfall of options for a homeowner
  • Remember: Some investors (Fannie Mae and Freddie Mac) are not participating; offering a cooperative or traditional short sale
  • Proactive outreach to homeowners
  • Offering a pre-approved short sale solicitation 
  • After offer is submitted, approval within 14 days
  • Promissory Note – Not required with HAFA 
  • Homeowner required to clear second liens
  • Homeowner leaves the home – no deficiency and no contribution

Cooperative Short Sales:

  • Similar in approach to HAFA but wider in scope
  • Includes homeowners who are not eligible for HAFA – non-owner occupied, jumbo loans, Fannie, Freddie
  • Currently in pilot stages with rollout expected 2nd Quarter of 2010

Steps Underway to Educate Agents

Education Materials:

  • Overview of the process so agents can lead process
  • Step-by-Step Guidelines for working through the system as an agent and homeowner
  • Tips to avoid common problems

Outreach Events to Distribute Materials

  • Large Realtor Events
  • Webinars
  • Participation with Short Sale Certification Programs

Want Agents’ Input

  • Developing mechanisms for on-going feedback on process, systems, materials
  • Will act on feedback with continuous improvements

Introduction to Equator

  • 24/7 access to the short sale system
  • Status tracking
  • Direct communication with the Short Sale Negotiator
  • Documents are uploaded directly to Equator instead of faxing
  • Streamlined approval process
  • Historical view of offers and counter offers

Coming Soon in Equator:

  • There are a few specific loan investor types (i.e., FHA/VA) that are not on the Equator system and will be added at a later date
  • Agent feedback, homeowner feedback, and internal data is being leveraged to identify system and/or enhancements for future process rollouts and educational material improvements

Agent Communication within Equator

  • Throughout the process you will receive notifications of the status of the short sale. The system automatically tracks the agent, customer, and bank tasks and will alert you after key milestones have been achieved and to let you know the next steps.
  • For specific questions/concerns you have, the negotiator assigned to the short sale is your primary contact.
  • Please ensure when sending a message in Equator you only select “Negotiator”.
  • We request that you only send messages via Equator and not directly through email. This enables our associates to effectively manage the case load and respond to agent inquires in a timely manner.
  • If you have submitted a request to the Negotiator via Equator AND there has been no response after 2 business days: You should escalate to a “Team Lead” by selecting this role in your message drop down menu.
  • In the event of an urgent issue, such as, a foreclosure sale date within 48 hours: You should immediately escalate to the “Team Lead” and “Manager”; and also call the Short Sale support team at 1-866-880-1232. 

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