HAFA Short Sale

Preparing and offering the SSA

If the Servicer evaluates the Borrower and determines that the Borrower is eligible for a HAFA Short Sale The Servicer must comply with the

following steps

Preparing and offering the SSA

The Servicer is not required to obtain Freddie Mac's prior approval ,provided: Minimum acceptable net proceeds Allowable Transaction Costs SSA

Minimum acceptable net proceeds

The Servicer must document the minimum acceptable net proceeds

The Minimum acceptable net proceeds determined by:▪ Broker's Price Opinion (BPO) or appraisal

minus :▪ (1) the Allowable Transaction Costs▪ (2) the maximum amount payable to subordinate lien holders▪ (3) the Borrower relocation incentive paid

Minimum acceptable net proceeds example

For example, if the 90 day "as is" marketing valuation of the Mortgaged Premises is $100,000, then the minimum acceptable net proceeds will be $82,000:

$100,000 (gross sales price) -$9,000 (maximum Allowable Transaction

Costs) -$6,000 (maximum aggregate payment to

subordinate lien holders) - $3,000 (Borrower relocation incentive)

$82,000 (minimum acceptable net proceeds)

Minimum acceptable net proceeds

After signing an SSA, the Servicer must not: Increase the minimum acceptable net

proceeds Decrease the minimum acceptable net

proceeds unless authorized by Freddie Mac

Disclose the minimum acceptable net proceeds amount to any party

Allowable Transaction Costs

Freddie Mac will pay up to a total of 9% of the final sales price towards (1) reasonable closing costs paid by a

seller. (2) Real estate brokerage commissions of

up to 6% of the final sales price.

SSA

The SSA outlines the roles and responsibilities of the Servicer and the Borrower in the HAFA Short Sale process.

After the Servicer has performed an evaluation, the Servicer must prepare and send an SSA to the Borrower.

SSA

The Servicer must also: Send the Borrower Form 1136, Request for Approval of Short Sale (RASS)

Prior to sending the SSA and RASS to the Borrower, the Servicer must complete all missing information and delete all inapplicable language

In accordance with the information on the following slides

SSA Requirements

A fixed termination date that is 120 calendar days from the effective date of the SSA

The minimum list price which shall be the 90 day "as is" marketing value

SSA Requirements

The Allowable Transaction Costs which may be deducted from the gross sale proceeds are (1) the reasonable closing costs (2) real estate brokerage commissions of up to

6%, for a total of 9% of the final sales price If the Servicer retains a vendor , the

Servicer must indicate this in the SSA.

SSA Requirements

The amount of the monthly mortgage payment the Borrower will pay during the term of the SSA

A closing date that is no less than 45 calendar days from the date of the sales contract

Borrower Obligations

The Borrower must sign and return the SSA within 14 days

A copy of the listing agreement A copy of the multiple listing service

("MLS") listing Information regarding any

subordinate liens.

Borrower Obligations

Provide all information and sign documents required to verify HAFA eligibility

Cooperate with the listing broker Maintain the interior and exterior of

the Mortgaged Premises

Borrower Obligations

Work to clear any liens or other impediments to title

Make the monthly payment

Monitoring marketing activity; cause for termination

The Servicer must terminate the SSA before its expiration if any of the events in the following slides occur

Causes for Termination

The Borrower's financial situation The Borrower or the listing broker

fails to act in good faith A significant change occurs to the

condition and/or value of the Mortgaged Premises

Causes for Termination

There is evidence of fraud or misrepresentation

The Borrower files for bankruptcy and the court declines to approve the SSA

Litigation is initiated or threatened

Causes for Termination

Note: The Borrower's failure to make monthly payments on the Mortgage is not a cause for termination, unless accompanied by another breach of the SSA.

Title work and identification of claims on title

After receipt of the signed SSA from the Borrower, the Servicer must order title work to identify subordinate liens and other claims

There are, of course, exceptions

Title work and identification of claims on title

If the Servicer has previously ordered title work

The Servicer must share the title work with the Borrower and/or the listing broker

Title work and identification of claims on title

The Servicer may not require the Borrower to pay in advance

However, the Servicer may add the cost to the amount owed under the Mortgage

Title work and identification of claims on title

If a HAFA Short Sale or Deed-in-Lieu is completed, the Servicer may request reimbursement of the expense

Request for approval of a HAFA Short Sale

Submitting the RASS to the Servicer The RASS provides the terms and

conditions Delivering to the Servicer a

completed RASS

What is Required

A copy of the executed sales contract and all addenda

Buyer's documentation of funds or buyer's pre-approval or commitment letter

Copies of all documentation indicating that subordinate lien holders have agreed to release their liens and the Borrower from liability

A preliminary HUD-1

Approval or disapproval of a HAFA Short Sale

Two aspects: Net sale proceeds equal or exceed

minimum acceptable net proceeds Net sale proceeds less than minimum

acceptable net proceeds

Net sale proceeds equal or exceed minimum acceptable net proceeds

Within ten (10) Business Days of receipt of the RASS, the Servicer must indicate its approval

Determined by the Servicer prior to execution

Net sale proceeds equal or exceed minimum acceptable net proceeds

Within one (1) Business Day of approval of a RASS, the Servicer must enter all terms of the transaction and other required information into Workout Prospector®

Requirements

Enter information related to the Borrower relocation incentive, etc., on the HUD-1 screen of Workout Prospector

In the "Recommendations" section, indicate the following in all caps: HAFA SHORT SALE

Requirements

Send an email to NPL_file_prep@freddiemac.com and

In the subject line of the e-mail enter the Freddie Mac loan number and notation "HAFA Short Sale – Approval"

Net sale proceeds equal or exceed minimum acceptable net proceeds

HAFA Short Sale What may not be required

Net sale proceeds equal or exceed minimum acceptable net proceeds

The possible closing date.

Net sale proceeds less than minimum acceptable net proceeds

The Servicer may indicate its disapproval of the proposed sale

Net sale proceeds less than minimum acceptable net proceeds

The Servicer must also evaluate the terms of the offer

HAFA Short Sale request received, but Borrower not previously evaluated for HAMP

If Borrower has an executed sales contract that would result in a short payoff of the Mortgage.

The Servicer must clearly communicate information to the Borrower

HAFA Short Sale request received, but Borrower not previously evaluated for HAMP

The Servicer must process the sales contract in accordance with the requirements of a short payoff

Extensions of SSA

A recommendation to Freddie Mac to extend the SSA if

(i) The Borrower has fully complied with the SSA

(ii) The Servicer believes an extension will result in an offer

Extensions of SSA

The Servicer must submit a recommendation for an extension no fewer than 15 days prior to the expiration

"Request for Extension of SSA" to HAFA@freddiemac.com

Must also provide recommendations relating to the marketing of the Mortgaged Premises

Extensions of SSA

If Freddie Mac approves the extension, must prepare a written extension agreement

The extension agreement must also amend other terms of the SSA

If an extension is not recommended nor approved, must consider the Borrower for a HAFA Deed-in-Lieu

Closing, reporting and remitting requirements

Within five Business Days, the Servicer must submit copies of the documents listed in the following slide to Freddie Mac

Via fax at (571) 382-4910 (or as otherwise directed)

Required Documents

Proceeds check or wire communication notice

Copy of the final sales contract, including any addenda

Final HUD-1 Proof that subordinate liens have

been paid and commitment from the subordinate lien holder(s) to release the lien(s)

Closing, reporting and remitting requirements

The Servicer must comply with the reporting and remitting requirements of Closing, reporting and remittance

The Servicer must advance from its own funds

Closing, reporting and remitting requirements

Servicers must refer to and comply with the additional requirements of : Closing, Reporting and remittance Remitting additional proceeds and

requesting reimbursement for expenses.