Big Changes to Short Sale Practices Announced
New Lending Short Sale Standards Coming
From the California Association of Realtors
Thhe Federal Housing Finance Agency (FHFA) will realign guidelines for Fannie Mae- and Freddie Mac-based short sales allowing lenders and servicers to qualify short sale borrower/buyers for a short sale quicker and easier.
Here are some specific changes that are effective Nov. 1, 2012:
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 who are current on their mortgages for short sales 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.
Additionally, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan.
These changes follow FHFA’s announcement in June that established strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.