In an effort to stream line short sales Fannie Mae and Freddie Mac announced they are issuing new guidelines to their mortgage servicers that will consolidate existing short sale programs into one standard short sale program.
The new Fannie Mae and Freddie Mac Short Sale guidelines, which go into effect Nov. 1 2012, will permit a homeowner with a Fannie Mae or Freddie Mac mortgage to sell their home in a short sale even if they are current on their mortgage if you have an eligible hardship. Some common reasons for borrower hardship's are death, divorce, disability, and distant employment transfer or relocation. Borrowers will now qualify for a short sale if they need to relocate more than 50 miles from their home for a job transfer or new employment opportunity.
This does not mean that you can move to get out of your under water home. Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes. Servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale.
Fannie Mae and Freddie Mac Short Sales Offer special treatment for military personnel with Permanent Change of Station (PCS) orders:
Service members who are being relocated will automatically be eligible for short sales, even if they are current on their existing mortgages, and will be under no obligation to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes.
Some of the new guidelines:
- Offer a streamlined short sale approach for borrowers with hardships such as death of a borrower or co-borrower, divorce, disability or relocation for a job without any additional approval from Fannie Mae or Freddie Mac.
- Expedite short sales for those borrowers who have missed several mortgage payments, have low credit scores and serious financial hardships. The documentation required has been reduced or eliminated.
- Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.
- Servicers are required to review and respond to short sales within 30 days of receipt of a short sale offer.
- Servicers will have more clear and consistent guidelines making it easier to process and execute short sales.
- Servicers must provide weekly status updates to the borrower if the offer is still under review after 30 days.
- Servicers must make and communicate final decisions to the borrower within 60 days of receipt of the offer and complete borrower response package.
- These borrowers will not be eligible for a new mortgage backed by Fannie Mae or Freddie Mac for at least two years after a short sale.
Not sure if Fannie Mae or Freddie Mac owns your loan? Click the following links to find out.
Fannie Mae Freddie Mac
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