On August 21, the Federal
Housing Finance Agency (FHFA) stepped in and announced that Fannie Mae and
Freddie Mac are consolidating existing
short sale programs into one standard short sale program. The goal of streamlining the programs will
eventually enable lenders and servicers to quickly qualify borrowers for a
short sale, and expedite assistance to borrowers.
Key points in this newly
released guidelines are the following:
- Permission to do a short sale even if a homeowner is still current on mortgage payments, as long as hardship is evident;
- Job relocation of 50 miles for a job is permissible for a short sale without any additional approval from the GSEs.
Other guidelines include:
- Fannie Mae and Freddie Mac will waive the right to pursue a deficiency judgment in exchange for financial contribution from the homeowner, given that the assets and income documentation show ability to contribute, on the part of the borrower; borrower can also sign promissory notes;
- Offer special treatment for military personnel with Permanent Change of Station ( PCS) orders;
- Provide clarity for servicers and borrowers on the short sale process when there is pending foreclosure sale already slated against the property;
- Offer up to $ 6,000 to any second lienholder for the release of the lien and expedite the short sale.
Currently, Fannie Mae has a
proprietary program and a HAFA short sale program, and Freddie Mac has its own
version, too. The HAFA short sale
program of both GSEs are mirrored after
the U.S. Department of Treasury’s Home Affordable Foreclosures Alternative
(HAFA) program. With this new guidance
from the FHFA, all these programs will be consolidated, making it easy for
servicers to render a qualifying decision for borrowers seeking a short sale.
With this news from the FHFA,
I am greatly looking forward to November 1, 2012 – the date implantation of the
guidelines will commence. As a realtor
who negotiates short sales everyday, simplification and stream lining is needed to provide an
enhanced customer service for eligible borrowers. Short sales can be frustrating not only
buyers, but more importantly to sellers, who repeatedly submit financial docs
time and again, as documents expire when a short sale is not processed on a
timely manner. If the new guideline will
indeed make the process more efficient and cut back processing times, then
everybody benefits – the lender, the homeowner, the buyer, the entire
community. A short sale concludes a
foreclosure scare- the homeowner
recovers and is able to get back up and rebuild his credit.
Standard Short Sale/HAFA II,
the name designation for this consolidated program, will pave the way for more Americans
who were previously denied for a short sale, because they are still currently
paying their mortgage, to be able to qualify this time. One can be current and still be eligible. Borrowers can avoid foreclosure and its negative
impact, stay in their homes until the
successful conclusion of a short sale & keep their homes occupied and
maintained.
The benefits of the Standard Short Sale/HAFA II are positive
looking.
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