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.
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.
