The Long Realty Short Sale Resource Center provides you helpful information on short sales, the short sale process and how to search for short sale properties. Articles are provided by the Long Realty Short Sale Resource Group, a collaboration of Long Realty agents and managers with an expansive knowledge of short sales.
FHFA Announces New Short Sale Guidance
September 27, 2012
On August 21, 2012, the Federal Housing Finance Agency (FHFA, the conservator of Fannie Mae and Freddie Mac), announced that Fannie Mae and Freddie Mac would be issuing new guidelines to enhance and streamline the short sale process.
In general, lenders who service mortgages owned and/or insured by Fannie and Freddie will be allowed to approve short sales for borrowers with severe financial hardship with limited documentation without the requirement of going back to Fannie or Freddie for specific approval. Borrowers who are not delinquent on their mortgage payments may now be considered for a short sale if they face a financial hardship such as divorce, long distance employment transfer, or a severe disability. Active duty military personnel are now provided with special allowances and consideration for short selling their home. If a short sale is approved, the new guidelines allow for debt forgiveness of any remaining loan balance after the short sale is closed. Criteria to decide whether or not a borrower will be required to make additional cash payments and/or sign a promissory note at closing, is clearly defined in the new Guide. In the event there is more than one mortgage, the new guide allows up to $6000 of the sale proceeds to go to the secondary lienholders and requires them to release the borrower from any future debt obligation. Finally, lenders are now requested to provide borrower’s real estate agents early on in the short sale process, guidance as to value of the home that would be required to gain approval of the short sale request. Servicers are required to implement the changes by Nov. 1, 2012 and these new guidelines incorporate the recent response time lines initiated by Fannie and Freddie June 15, 2012.
These new guidelines along with other recent changes announced by Fannie and Freddie should make the Fannie Mae and Freddie Mac short sale process quicker and less complicated. However, one should still find a Realtor that is knowledgeable and experienced with the short sale process to assist them with the many "pitfalls" of short sales.
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