The Federal Housing Financial Administration (FHFA) has just announced that it will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale. Real estate professionals and associations have long advocated for a streamlined, standardized short sale process, and some of the changes below address some of the main concerns involving these transactions.
Effective November 1, 2012, the primary changes are as follows:
- Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year).
- Enables servicers to quickly and easily qualify certain borrowers for short sales who are current on their mortgages without waiting for an approval from Fannie Mae or Freddie Mac Offers special treatment for military personnel with Permanent Change of Station (PCS) orders.
- Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.
- May pay borrowers up to $3,000 in relocation assistance.
- Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale.
FHFA also clarified that a borrower experiencing a hardship must wait at least two years following a short sale before becoming eligible for a new Fannie Mae or Freddie Mac loan.
It is hoped that these new guidelines will improve short sales eligibility for those troubled homeowners trying to avoid a foreclosure so they can move on with their lives. Of course, only time will tell….
See Fannie Mae’s press release regarding the new short sale guidelines: http://www.fanniemae.com/portal/about-us/media/corporate-news/2012/5814.html
For a copy of Freddie Mac’s Servicer Bulletin go to: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1216.pdf