NEW SHORT SALE GUIDELINES ANNOUNCED

This month - August 2012 - Fannie Mae and Freddie Mac launched new short-sale guidelines for servicers to streamline the process of moving distressed borrowers through a short sale. The guidelines take effect Nov. 1.  The changes only affect underwater mortgages guaranteed by Fannie and Freddie, which back the majority of U.S. home loans.

Homeowners will not have to be in default for a short-sale to be considered.  Borrowers dealing with the loss of a co-borrower, divorce, legal separation, illness, disability or a distant employment transfer will have the option of getting a short sale approved by the servicer before they actually default on a payment. 

IMPORTANTLY -- Housingwire.com reported August 21, 2012, that the FHFA's new guidelines would waive deficiencies for borrowers who complete a short sale BUT with a string attached:

"Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes: Servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale." (emphasis added) You can read the Press Release directly.

In June of this year, Fannie Mae, set out formal timelines for short sales, saying that mortgage lenders would have to respond to a short-sale offer within 30 days of receiving it.

Fannie in the new guidelines is cutting down the amount of documentation required to complete a short sale under hardship circumstances and eliminating certain documentation requirements for borrowers who are 90 days or more delinquent or have a credit score below 620.

One part of the plan is for Fannie and Freddie to offer up to $6,000 to the holders of second mortgages to expedite the sale.  The Wall Street Journal this morning reported erroneously on this fact.

The new guidelines also gives servicers the authority to approve and complete short sales that conform to the new standards without individual approval from Fannie Mae and Freddie Mac.

The WSJ additionally reported that short-sales have been growing as a percentage of home sales. They made up 8.8% of home sales in May, up from 7.6% a year earlier and 6.5% in 2010, according to CoreLogic Inc.

Fannie Mae hid benefits of reducing mortgages, lawmakers say

Please read the details of this as reported by The Washington Post.  Working in the trenches, I know first hand how devastating it has been to homeowners that Fannie Mae has blocked the ability of banks to offer loan principal reductions.  Citibank apparently offered to do so back in 2009.  Why this program was canceled?  The documents submitted offer no answer.

Why are people not storming the "Citadel" - storming DeFranco's office?


"....Since being appointed head of the Federal Housing Finance Agency (FHFA) in 2009, DeMarco has refused to allow Fannie and Freddie to write down loan balances, in part because he worries that some homeowners would stop paying their mortgages to get relief, ultimately costing taxpayers more money. He has been steadfast in his disapproval in recent months despite growing pressure from Obama administration officials and House Democrats to allow principal reductions....."

Fannie Mae hid benefits of reducing mortgages, lawmakers sayFannie Mae concluded years ago that it could substantially reduce losses by cutting the principal of some loans to borrowers in financial trouble, but it kept the finding secret, said Rep. Elijah Cummings, D-Md., the senior Democrat on the House committee that oversees the agency. Cummings and Rep. John Tierney, D-Mass., said in a letter that they learned of the finding from documents provided by a former Fannie Mae employee. The Washington Post(5/1), MSNBC/Economy Watch blog (5/1)

The New Google

I recognize that it's not easy keeping up with the myriad of changes going on with Google - making it exceedingly difficult to keep email accounts active, domains working, no less your blog up to date....in other words, I have been challenged. 

I am just grateful that I was able to sell off my Google stock during the most recent stock market rally.  What is going on with these folks?   Have you ever attempted customer service or the lack thereof?

Meanwhile I digress on a real estate blog....merely venting....