Fannie Mae and Freddie Mac Accelerating Short Sale Guidelines
Short Sale Questions And Answers
Fannie Mae and Freddie Mac’s regulator, the Federal Housing Finance Agency, recently changed their short sale guidelines, and are now requiring loan servicers who take more than 30 days to make a short sale decision to provide weekly status updates. Additionally, they are required to give a yes or no answer no later than 60 days after receiving an offer.
The new rules have been in effect since this past June, and the hope is to “develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure." Other changes expected by the end of the year will address borrower eligibility, fraud mitigation, documentation simplification, property valuation, mortgage insurance, and more. The new guidelines pertain to Freddie Mac’s traditional short-sale program, but also for borrowers considering deed-in-lieu of foreclosure under the Home Affordable Foreclosures Alternatives (HAFA) program.
The new program is expected to take some time for loan servicers to get used to, so Freddie Mac is being lenient with lenders who need more time to obtain a broker price opinion, or approval from a private mortgage insurer before they can accept a short sale offer, or approve a HAFA borrower response package. Additionally, if a loan servicer makes a counteroffer, the borrower has new stipulations too. Now, they must respond within five business days, which gives the servicer 10 more business days to evaluate the borrower’s response.
Freddie Mac completed 45,623 short sales last year and says the new requirements are an effort to comply with FHFA direction to create consistent standards and help manage delinquencies.
Adds Tracey Mooney, Freddie Mac senior vice president of single-family servicing and REO, "Short sales are more complex than routine home sales since they may involve multiple parties and long-distance negotiating. Freddie Mac's new timelines are intended to help make the decision process more transparent and timely for short sales under the Obama administration's HAFA program or Freddie Mac's traditional short-sale option."
Bank of America is also working towards decreasing decision times on short sale offers, cutting time to no more than 20 days. Previously, it could take 45 days or longer to complete a short sale for them. The hope is to make the process more seamless on for both lenders and those interested in purchasing a short sale property.
We are a team of short sale realtors in Palm Beach County, and we would love to help you find the Palm Beach home of your dreams. We specialize in real estate luxury foreclosures, and short sales throughout South East Florida. Please let us know if we can assist you with your home buying or home selling needs.
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