Module 4: The RASS & Alt. RASS

The RASS

RASS Cover Letter RASS Cover Letter Lines 1-3 & 5 reiterate items discussed in SSA

RASS Cover Letter RASS Cover Letter Line 4: No other agreements or offers not disclosed to servicer

Emerging Fraud Trends: Short Payoff Fraud

Short Payoff Fraud "Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known."

How Short Payoff Fraud Works Seller owes $100,000, property worth $80,000 Facilitator negotiates a $70,000 payoff Facilitator doesn’t disclose existing offer for $95,000 Both sales close simultaneously

Where’s the Fraud? Failure to disclose the second offer Lender takes bigger loss

Other Agreements or Offers If other offers received servicer should be informed REALTORS® –Be aware –Avoid fraud or appearance of fraud

RASS Page 2 RASS Page 2 Seller Net Sheet $3,000 to seller or tenant

RASS Page 2 RASS Page 2 Preliminary HUD-1 Complete RASS based on HUD-1 $8,500 Max Subordinate Mortgage lien payoff

RASS Page 2 (cont’d.) RASS Page 2 (cont’d.) Attach all required info Remember required contract language:  Arm’s length  90 day prohibition on re-sale Return within 3 Biz days

RASS Page 3 RASS Page 3 Sale Approved!!!

RASS Page 4 RASS Page 4 Disapproval of Sale Reasons explained May include counter offer If no counter, determine cause for disapproval and re-submit

The Alt. RASS

The Alternative RASS Purchase offer received but… Seller has not: –Requested a HAFA short sale –Qualified yet for HAFA –Received SSA Submit contract with Alt. RASS Check servicer’s web site for form or procedure No Alt. RASS

Submitting the Alt. RASS Check servicer’s web site for package or procedure Submit Alt. RASS & contract Non-GSE loans, servicer must approve, disapprove or counter offer within 30 days of receipt of Alt. RASS & other docs. Fannie Mae, no time frame

Alt. RASS Detailed Discussion Alt. RASS Cover Letter Alt. RASS Cover Letter Takes the form of a solicitation by servicer Contact servicer for specific instructions and/or forms

Alt. RASS Page 2 Alt. RASS Page 2 Borrower has received an offer and requests a short sale

Alt. RASS Pages 2 & 3 Contain same information regarding the Program Terms and Conditions as in the SSA &/or RASS

Alt. RASS Page 4 Alt. RASS Page 4 Net Sheet, same as RASS Attached document list Check servicer’s web site for complete list of required docs

Alt. RASS Pages 5 & 6 Approval & Disapproval pages If disapproved, review reasons and re-submit

HAFA General Terms & Conditions

Foreclosure sale suspended: Determining eligibility Awaiting SSA During SSA term Pending closing

Payment Forbearance Servicer may require monthly payments? Can’t exceed 31% of gross income

First Mortgage Release Released within 30 days Waive deficiency judgment Can’t require note from borrower #1 4-26

Subordinate Liens $8,500 total aggregate for all mortgage liens On HUD-1 Liens released

Subordinate Liens No future liability for borrower Written release required prior to releasing funds Can’t require $$$ from seller or licensee

Borrower Fees No processing fees Servicer pays all Borrower waives reimbursement of impounds and insurance

Mortgage Insurance Approval required Insurer must waive rights to collect Fannie & Freddie seek “Delegations of Authority”

Incentives – Thru 2013 Borrower or tenant: $3,000 –On HUD-1 –Servicer reimbursed Servicer: $1,500 Investor: $2,000 max. to release subordinate liens –$1 for $3 basis

Required Signatures Servicer –Actual date Original borrowers Exceptions –Deceased –Divorced –Special cases

Reporting Requirements Servicer reports to Fannie Mae –SSA executed or updated –Sale Closes –SSA Terminates

Servicer Compliance Freddie Mac is compliance agent Servicer must have staff & resources to implement HAFA 61 Questions or Complaints to: 4-34

Problems??? Treasury HAFA – Fannie Mae –800-7FANNIE Freddie Mac –800-FREDDIE

Problems??? Escalation for non-HAFA Programs FHA loans: FHA National Servicing Center – VA loans: Service Center – USDA loans: Centralized Servicing Center –