WASHINGTON – Nov. 1, 2012 – Starting today, Nov. 1, 2012, new short sale guidelines spearheaded by the Federal Housing Finance Agency (FHFA) go into effect. The new rules impact all mortgages under the federally controlled Fannie Mae and Freddie Mac.
One part of the change allows a handful of the nation’s larger mortgage servicers to approve a short sale without needing Fannie or Freddie to sign off on it.
One part of the change allows a handful of the nation’s larger mortgage servicers to approve a short sale without needing Fannie or Freddie to sign off on it.
“We applaud the nation's mortgage insurers for committing to work with us and our servicers to help more borrowers obtain short sales and other foreclosure alternatives,” says Tracy Mooney, senior vice president, servicing and REO at Freddie Mac. “By paving the way for more borrowers to avoid foreclosure, today’s announcement will support the housing recovery and help reduce taxpayer losses.”
In addition to quicker short sale approval, other changes become effective today. They including new guidelines for homeowners hit by a financial hardship, moved by the military or held back by a home’s second mortgage:
• Borrowers facing an approved hardship don’t have to be delinquent.
• Service members with Permanent Change of Station orders have greater flexibility, including the elimination of back-end debt-to-income ratios or a cash contribution promissory note.
• Fannie Mae and Freddie Mac won’t pursue deficiency judgments in certain cases under new rules. Servicers will evaluate borrowers as part of the short sale approval process.
• FHFA gave servicers more consistent guidelines to process and execute short sales, and consolidate existing short sales programs into a single uniform program.
• Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.
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