APLICACIÓN DE LAS MANIOBRAS DE HEIMLINCH OBJETIVO

Servicer must comply with all requirements for Deeds in Lieu of Foreclosure the mortgage insurance companies have for mortgages they insure or guarantee.

Approval must be obtained from WHEDA prior to submission to the MI Company.

WHEDA requires servicers to obtain the necessary approvals from the MI provider and does not allow servicers to rely on any delegated authority they may have obtained from MI providers relative to workout options.

Deeds in Lieu should be limited to truly exceptional hardship circumstances and only after other workout options have failed. Examples of exceptional hardship circumstances include:

• Permanent disability

• Terminal illness

• Death

The servicer may recommend that WHEDA accept a voluntary deed in lieu of foreclosure from the mortgagor if the property has been actively on the market for at least 90 days. The property must be listed at Fair Market Value (FMV). A listing agreement must be provided.

Once WHEDA determines that a Deed in Lieu is warranted, the servicer will submit a complete Deed in Lieu package to WHEDA for review. The package should be sent to WHEDA prior to submission to the MI company and should include:

• Letter of hardship written by the mortgagor or personal representative

• Bank statements, pay stubs and documentation for all sources of income from the last 30 days

• Financial statement and copies of the mortgagors last two years’ tax returns

• Recent tri-merged credit bureau report

• Payoff statement - If the loan is in foreclosure, WHEDA will obtain the attorney fees and costs and forward onto the servicer via the letter executed by the attorney

• Broker’s Price Opinion (BPO) or appraisal – no more than 90 days old. Must include interior and exterior photos

• If mortgagor is in a Chapter 7 bankruptcy, copies of bankruptcy schedules in lieu of financials will be accepted.

WHEDA will review the package. If further information or documentation is needed, contact with the servicer will be made to discuss and obtain.

WHEDA will give the servicer notice when the file is ready to be submitted for review and approval by the primary and pool insurance companies. WHEDA will submit the package to the pool insurer. Servicer will notify WHEDA when they have obtained an answer from the primary mortgage insurer. Copy of letter of approval or denial must be sent to WHEDA for the file.

WHEDA will notify the servicer in writing of the response from the pool insurer.

In all cases, property must be vacant and borrower must be able to convey clear and marketable title to the property. Title review will be completed by WHEDA’s attorney.

www.wheda.com WHEDA HOME Loan Servicing Manual 4

Foreclosure Avoidance Chapter 10

Preforeclosure/Short Sales (11/1/12)

The mortgagor may be considered only after all other foreclosure prevention alternatives have been exhausted. The servicer must explain both the benefits and the drawbacks of a Short Sale to the mortgagor. These include:

• Merely listing the property for sale will not delay the initiation of foreclosure proceedings

• The Mortgage Insurer(s) may insist on a financial contribution to mitigate their loss

• There may be tax consequences as a result of the short sale

• The Home-Owner will be expected to cooperate fully in the execution of all necessary documentation

• Mortgagor is still responsible for maintaining the property up until the date of closing

• Cost of the Broker’s Price Opinion will be charged to their account, and remain there as a Corporate Advance (even if the Short Sale falls through).

The servicer should obtain the following information and forward to WHEDA. Upon approval the service should submit to the applicable MI provider:

• Letter of hardship

• Financial statement, signed and dated

• Most recent paystubs covering 60 days for each mortgagor

• Most recent federal tax returns including all schedules

• Bank statements for all depository accounts covering most recent 60 days

• Most recent 401-K or retirement statement

• Offer to Purchase including a Real Estate Condition Report and Short Sale Addendum

• Current tri-merged credit report

• Listing Agreement

• Estimated HUD-1 Settlement Statement – the maximum sale commission is 6% (5% for

CMG)

• Title Commitment

• Interior Broker’s Price Opinion or Appraisal

• Payoff statement

WHEDA will review the short sale package. If further documentation or information is needed, contact with the servicer will be made to discuss and obtain. The servicer will be notified when the file is ready to be submitted for review and approval by the primary and pool insurance companies. WHEDA will submit to the pool insurer.

The servicer must forward a copy of the primary mortgagor’s decision to WHEDA. WHEDA will notify the servicer of the response from pool insurer. An approval letter will be sent to the servicer if the workout has been approved.

Servicer should provide a payoff good through the anticipated closing date of the sale. If the loan is in foreclosure, WHEDA will obtain the attorney fees and costs good through the closing date and forward on to the servicer via the letter the attorney executes.

Foreclosure Avoidance Chapter 11

Foreclosures