Guide Bulletin 2010-12 Announces Freddie Mac’s Requirements for Implementing HAFA
June 1, 2010
With today's Single-Family Seller/Servicer Guide (Guide) Bulletin 2010-12, we announced Freddie Mac’s requirements for implementing the United States Department of the Treasury's (Treasury) Home Affordable Foreclosure Alternatives (HAFA) initiative. Treasury introduced HAFA as part of the Making Home Affordable Program (MHA) on November 30, 2009, in Supplemental Directive 09-09, Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure, which was subsequently revised on March 26, 2010, in Supplemental Directive 09-09 Revised.
- HAFA attempts to mitigate the impact of foreclosure on borrowers and communities by encouraging the private sale of properties or the voluntary transfer of properties from borrowers to investors.
- The initiative provides eligible borrowers with an alternative that is preferable to foreclosure.
- HAFA strives to help borrowers who do not qualify for or complete a Home Affordable Modification program (HAMP) permanent modification or other Freddie Mac home retention options to transition into more affordable housing and avoid foreclosure.
- HAFA is designed to provide Servicers and borrowers with an incentive to use a short sale or deed-in-lieu to avoid a foreclosure for HAMP-eligible borrowers.
It is important that Freddie Mac Servicers thoroughly review the details provided in today's Guide Bulletin and in our new Guide Chapter D65, Home Affordable Foreclosure Alternatives.
Freddie Mac's Requirements for HAFA
Freddie Mac Servicers may begin offering HAFA to eligible borrowers immediately, but the initiative must be incorporated into their operations and be offered no later than August 1, 2010. Before offering eligible borrowers a HAFA Short Sale, Servicers must first consider them for a HAMP modification. If the borrower is not eligible for HAMP, then the Servicer must next consider the borrower for other Freddie Mac home retention options. If a HAFA Short Sale does not sell within the marketing period, the Servicer may offer eligible borrowers a HAFA Deed-in-Lieu, if authorized by Freddie Mac.
At a high-level, other HAFA requirements outlined in today’s Guide Bulletin include the following:
- Eligibility and evaluation criteria, including the requirements that a borrower must be more than 60 days delinquent and have cash reserves less than the greater of $5,000 or three times their current monthly mortgage payment.
- Financial parameters that are unique to a HAFA Short Sale and differ from a Freddie Mac Short Payoff as defined in Guide Chapter B65.
- Incentive compensation for Servicers and borrowers, and payments to subordinate lien holders.
- Standard documents that must be used for HAFA, which are available on our HAFA Borrower Solicitation Web page.
- Electronic Default Reporting (EDR) reporting requirements, a HAFA activity and data tracking spreadsheet, and new HAFA EDR codes.
- Approval and settlement requirements for both short sales and deeds-in-lieu.
Get More Information
Read the June 1, 2010, Guide Bulletin, and these resources for more information:
- Read our HAFA fact sheet.
- Visit Freddie Mac's HAFA Web site.
- Register for HAFA training through The Learning Center.
- Visit HMPadmin.com for HAMP information, including Supplemental Directives, waivers, and Frequently Asked Questions HAMP - 2009-2010 Conversion Campaign.
- Review information for borrowers about the federal Making Home Affordable Program.
As always, contact your Freddie Mac representative or call 800-FREDDIE if you have questions about the information in today's Guide Bulletin.