New Short Sale guidelines, Fall 2012

Do you owe more on your home than your home is worth in the Cedar Rapids area market? Even if you haven’t defaulted on your mortgage, this is still a possibility. If your home is upside down, selling and paying off the mortgage could be a real shock come closing day, but perhaps you could benefit from a short sale from your lender.

November 1, 2012 the Federal Housing Finance Agency (FHFA) will give Fannie Mae and Freddie Mac a few new guidelines, all in the name of expediting the short sale process. Have you heard how long a short sale can take? This change is huge!

According to the National Association of Realtors, here are some of the specific changes effective November 1, 2012:

  • Current Fannie Mae and Freddie Mac short sale programs will be eliminated and a single standard process for both entities will be created. (Fannie and Freddie HAFA programs will expire at the end of 2012.)
  • Certain borrowers can be quickly and easily qualified by loan servicers without waiting for approval from Fannie or Freddie, but this only applies to borrowers who are current on their mortgage.
  • Members of the military who have received Permanent Change of Station (PCS) orders will be given special consideration.
  • Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.
  • Borrowers may receive up to $3,000 for relocation assistance.
  • Fannie Mae and Freddie Mac will offer up to $6,000 for subordinate lien holders to expedite a short sale.

But all this good news doesn’t come without a little…trade-off. A borrower, who is already experiencing hardship, will have to wait two years before being eligible for a Freddie Mac or Fannie Mae loan in the future.

In addition to the FHFA’s announcement of the guidelines, there are also changes pertaining to loan servicers:

  • Servicers must respond to short sale offers within 30 days,
  • Servicers must provide weekly updates to the borrower, and
  • Servicers must communicate a final decision to the borrower within 60 days of receipt of the offer.

Times can be tough, but if you find yourself in a tight spot with your home give me a call. I can help you navigate the short sale or conventional sale process with ease and clarity!