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November 30, 2009

HAMP Update – New Program Offers Borrowers Foreclosure Alternatives

Today, November 30, 2009, Supplemental Directive 09-09: Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure was published.


Supplemental Directive 09-09 provides guidance to servicers on the Home Affordable Foreclosure Alternatives Program (HAFA) and includes the general terms and conditions, evaluation process, documentation, and reporting requirements. As part of the Home Affordable Modification Program (HAMP), HAFA provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu (DIL) to avoid foreclosure on a HAMP-eligible loan.

See below for more information and review the complete Supplemental Directive 09-09 on

Foreclosure Alternatives

The HAFA program simplifies and streamlines the use of short sale and DIL options by incorporating the following unique features:

  • Complements HAMP by providing viable alternatives for borrowers who are HAMP eligible.
  • Utilizes borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
  • Allows the borrower to receive pre-approved short sale terms prior to the property listing.
  • Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
  • Requires that borrowers be fully released from future liability for the debt.
  • Provides financial incentives to borrowers, servicers, and investors.

Timing & Eligibility

Servicers – Supplemental Directive 09-09 is effective April 5, 2010, but participating servicers may elect to implement HAFA prior to April 5, 2010, in accordance with the Supplemental Directive. In order to participate in HAFA, a servicer must have executed a HAMP Servicer Participation Agreement (SPA) by December 31, 2009. (The HAMP SPA is available for review on

Borrowers – Servicers must consider a HAMP-eligible borrower for HAFA in accordance with their policies within 30 calendar days of the date the borrower:

  • Does not qualify for a HAMP Trial Period Plan,
  • Does not successfully complete a HAMP Trial Period Plan,
  • Is delinquent on a HAMP modification by missing at least two consecutive payments, or
  • Requests a short sale or DIL.

Note: A borrower must be considered for a HAMP modification and other retention programs offered by the servicer prior to being considered for HAFA.


Please contact the HAMP Support Center at or 1-866-939-4469.

This message was sent via email to servicer representatives registered for on effective date at top of the message.



Many Loan Modification Companies and Attorneys
Are NOT What They Appear To Be...

♦ Be weary of the ads you hear on radio and TV ♦


The State Bar of California has recently launched numerous investigations against attorneys for misconduct related to loan modifications.  In a rare move, the State Bar has released the names of 16 attorneys under investigation, by opting to waive investigation confidentiality in favor of public protection.  These attorneys have allegedly taken fees for promised services, but failed to perform those services or even communicate with their clients who face the possible loss of their homes.  Their non-attorney staff may also be under investigation for unlawfully practicing law.

Not all attorneys engaged in loan modifications are unscrupulous.  However, this announcement from the State Bar serves as a good reminder for REALTORS® and their clients to be careful when dealing with attorneys and others for loan modifications.  Scam artists may intentionally associate or affiliate themselves with attorneys in an attempt to lend credence to their fraudulent schemes.  The list of attorneys currently under investigation is available at

When looking for an agent to help you with a Short Sale, please check them out thoroughly. The Short Sale Group at John Aaroe is fully prepared and well equipped to handle all the documentation, negotiation, and closing of your Short Sale transaction. We have successfully closed Short Sales for over two years and have the trained staff to handle all the details. We utilize Third Party negotiators as well as attorneys to deal with the bank, and we have an in-house transaction coordinator, licensed assistants, escrow company, and a number of title companies accustomed with closing Short Sales. 

We never, EVER, charge an upfront fee to handle your transaction, nor should you ever be required to pay one for a Short Sale. In some cases, an approved attorney may charge a processing fee to negotiate a loan modification, but only after all your options are fully disclosed and a detailed plan is outlined with you. Please be prepared before you undertake any type of action. We are here to answer all your questions and help guide you through the maze of information (and mis-information) so you can make an informed decision. Please email us at or call Remo today at 818-453-9161 and speak with him about your particular situation. 

*Information brought to you by the California Association of Realtors®



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