HAMP is a program for modification of your mortgage so you can stay in your home. HAMP has a Trial Period Plan. Loan Servicers must determine if a borrower is qualified to enter HAMP if the borrower applies for it or if the borrower is behind on his mortgage payments. HAFA was developed as part of HAMP as of 9/9/09 in a Supplemental Directive under HAFA loans serviced that are in Freddie Mac or Fannie Mae secondary market programs "the servicer may not require a cash contribution of promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower." This would negate its right under Colorado Law for a deficiency judgment since it cannot pursue it. It is very good for you since Colorado law provides for deficiency judgements.
It provides the ability for the borrower to receive pre-approved short sale terms prior to the property listing. This is very good because until this directive there was a great deal of uncertainty trying to determine what price and terms the lender would accept. Doubt drove away serious buyers. Now once they learn there is no doubt they can join among the buyers competing for your home.

It provides financial incentives to borrowers, servicers and investors. That
The property must be the principal residence;
The mortgage must be a first lien originated on or before January 1, 2009;
The mortgage must be delinquent or a default reasonably foreseeable;
The current unpaid principal balance is equal to or less than $729,750; and
the borrower's total monthly mortgage payment exceeds 31 percent of gross income.

Every loan must be considered for HAFA before the loan is referred to foreclosure or before the servicer allows a pending foreclosure sale to be conducted.
Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days of the date the borrower:

*Does not qualify for a Trial Period Plan
*Does not successfully complete a Trial Period Plan'
*Is delinquent on a HAMP modification by missing at least two consecutive payments; or
* Requests a short sale or deed in lieu

Agreements made in advance are according to instructions and a form provided in the Supplemental Directive. Among those instructions:
*Minimum 90 day maximum 1 year listing
*Servicer will allow a portion of the gross sale proceeds to be paid to the subordinate lien holders in exchange for release and full satisfaction of their liens The reason this is important is many times it is the junior lien holders that have prevented short sales and deed in lieu transactions from going through. This provision generates an incentive for the junior lien holders to cooperate.
*The borrower may be required to pay up to 31% of the borrower's gross monthly income toward the mortgage during the SSA term
*The servicer agrees not to complete a foreclosure sale as long as the borrower performs in accordance with the SSA. In the past there has been a problem with one department --the one that handles the short sale administration not coordinating well with the department that handles the foreclosure. There may still be some bureaucratic bungles but in light of the contractual responsibility it places on the loan servicer it greatly decreases the risk and a lawyer may be consulted if it does happen because he may advise that it imposes some kind of liability on the servicer.

*Borrower has only 14 calendar days to sign and return the SSA from its Effective Date along with a copy of the real estate broker listing agreement and information regarding any subordinate liens agreeing to the follosing:
Provide all information and sign all documents to verify program eligibility
Cooperate with thte listing broker and respond to the servicer inquires
Maintain the interior and exterior of the propert to facilitate marketability
Work to clear any liens to title that would prevent conveyance
Make the monthly payment stipulated in the SSA if applicable

What could terminate the SSA:
Borrower's situation improves significantly and/or the borrower qualifes for a modifcaiton or the borrower bings the account current or pays teh morgage in full;
Borrower or listing broker fails to act in good faith in listin, marketing and/or closing the sale
A significant change occurs to the property condition and/or value
There is evidence of misrepresentation
The borrower files for bankruptcy and the Bankruptcy Court declines to approve the SSA
Litigation is intitiated or threatened that could affect title or invalidate the conveyance
Borrower fails to make the monthly payment stipulated in the SSA, if applicable

When there is a contract to buy and sell real estate to present to the lender:

RASS is the agency's name for the form that accompanies the Contract to Buy and Sell Real Estate that is sent to the loan servicer.
It must be delivered to the servicer as a completed RASS describing the terms of the transaction and including a copy of the executed contract, all addenda, buyer's documentation of funds or pre-approval or commitment letter, and all information regarding the status of subordinate liens and/or negotiations with subordinate lien holders
Servicer must approve a RASS if the net sale proceeds equal or exceed what were prespecified
Servicer mus communicate approval or disapproval within ten business days of receipt
Servicer may require clsing within a reasonable period following acceptance but in no event less than 45 days from the datge of the sales contract without the consent of the borrower.
A sales contract may be entered into before an SSA has been executed:
By submitting an Alternative RASS (Exh B of the Directive)
The servicer must notify the borrower of the availability of a HAMP modification and allow the borrower 14 calendar days for consideration for it if the borrower appears to be eligible for it.
The servicer must verify the borrower's financial information though the documentation and obtain a signed Hardship Affidavit from the borrower prior to approving the short sale.
Release of Subordinate Liens
Servicer will allow up to an aggregate of $3,000 of the gross sale proceeds as payment(s) to subordinate mortgage/lien holder(s) in exchange fore a lien release and full release of borrower liability. Each lien holder, in order of priorty, may be paid three percent of the unpaid principal balance of their loan until the $3,000 aggregate cap is reached.
Payments thereof will be made at closing and reflected in the HUD-1 Settlement Statement.
Mortgage insurer must approve or the HAFA cannot proceed unless the mortgage insurer waives any right to collect additional sums (cash contribuion or promissory note) form the borrower.
Incentive for the borrower: $1,500 to assist with relocation from sale proceeds, to be shown on the HUD-1.