Short Sale Process Modified by Federal Housing Finance Agency for Fannie and Freddie Held Mortgage

New Short Sale Guidelines for Fannie Mae and Freddie Mac Held Loans

The Federal Housing Finance Agency (FHFA) issued new Short Sale Guidelines for Fannie Mae and Freddie Mac held loans effective Nov 1, 2012.

The highlights are:

Streamlined Short Sale (Delinquent Borrowers)
Will allow mortgage servicers to offer a short sale program to borrowers who have missed several payments on their mortgage, have low credit scores and serious financial hardships.  The documentation required to demonstrate this has been reduced or eliminated.

Short Sale Eligibility For Certain Borrowers Current On Their Mortgage
Mortgage Servicers will be permitted to process short sales for borrowers with the following hardships:
death of a borrower, unemployment, divorce, long term disability, distant employment or transfer or relocation (minimum of 50 miles), Increased Housing Expense, Disaster, Business Failure.
Borrowers with these hardships will not need any further approval from Fannie Mae or Freddie Mac to process these short sales even though the borrowers are current on their mortgages.

Fannie and Freddie Pursuit of Deficiency
Fannie Mae and Freddie Mac will not pursue a deficiency judgment when a borrower has sufficient income or assets to make a cash contribution or sign a promissory note for some repayment of short fall between sales price and balance owed on the mortgage.

Special Treatment of Short Sales for Military Personnel with a Permanent Change of Station Orders
Service members who are being relocated are automatically eligible for short sales even if they are current on their existing mortgage.  They will have no obligation to contribute funds to cover any short fall between the proceeds of sale and the balance owed on their mortgage.

Consolidates Existing Short Sale Programs into a Single Uniform Program

Provides Servicers and Borrowers Clarity on Processing a Short Sale when a Foreclosure is Pending

Fannie and Freddie Will Offer up to $6,000 to Second Lien Holders to Expedite a Short Sale

Processing Time Line
Once a mortgage servicer has designated a mortgage as eligible for short sale, a servicer is required to review and respond to a short sale offer within 30 days of its receipt and they must provide weekly status updates if the offer is still under review after 30 days.  They must make a final decision to the borrower within 60 days of receipt of the short sale purchase offer and borrower response package.

Borrowers disposing of their home through the short sale process will not be eligible for a new Fannie or Freddie backed mortgage for two years from date of short sale.

For Buyers and Sellers needing additional information, contact your real estate experts at www.johnhenryproperties.com.