HAFA Loaf Better Than....

The Treasury Dept. snuck in some new regulations Nov. 20 that people seem to be waking up to.

It's called HAFA -- Home Affordable Foreclosure Alternatives. The regs apply to loans from participating servicers, but not Fannie or Freddie, which will issue separate regulations.

HAFA supposedly takes effect April 5. And I don't see any way in heck that these servicers have any chance whatsover of complying.

Take one of the most basic HAFA guidelines -- banks are required to get back to borrowers within 10 days of the submission of the short sale package. In my case, it took about two months, and that was only after a certain amount of wheel squeaking on my end. No way that's going to happen. I wonder what, if any, penalty can be imposed on banks that take longer than 10 days?

And here's another provision of interest, at least to me. HAFA limits the payment that can go to junior lien holders, i.e. second mortgages. The HAFA regs impose of cap of $3000 in payments to second lien holders. That means big losses for holders of the seconds. Base on my recent experience, this too ain't gonna happen. I wonder what happens to a bank that doesn't follow the HAFA guidelines? I skimmed the guidelines, but didn't see any mention of penalties.

If you want to drill down and read the HAFA document yourself, it's here.