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NEW Short Sale Guidelines For PCSing Military Families

By Susanna Haynie

Real Estate Agent with CO-RE Group, LLC -Real estate sales and services ER100036445

October 30, 2012 11:37 PM

I am excited! Changes are coming for folks that are facing a short sale. Particularly our military families will finally get a break!

Don’t get me wrong! Short selling your home will still be a pain… with stacks of paperwork, dings to your credit score and not to mention a stressed family and possibly a bruised ego. However, at least guidelines are easing, to do what’s necessary to move on.

PCS (permanent change of station) orders often require quick moves and can create hardship for military homeowners who are underwater on their mortgages and therefore cannot sell their home without taking a loss. Previously, many service members felt their only option was either to maintain financial obligations on two residences or to default on their mortgage.

Proofing “hardship” has always been the big problem for military families, as PCS orders were not considered as such AND the families had to be delinquent in their mortgage payments to qualify for a short sale. This is changing. Starting November 1st there are new FHFA guidelines in effect for our military families:

To qualify for these new guidelines

you must have a Fannie Mae or Freddie Mac loan
the home must be purchased on or before June 30, 2012
you must have orders for a change of station (PCS)

Under the new policy:

There will be no deficiency judgment or any cash contribution or promissory note
military homeowners who receive Permanent Change of Station (PCS) orders will be eligible (qualify as hardship) to sell their homes in a short sale even if they are current on their mortgage.

Last year Fannie Mae or Freddie Mac issued guidance to mortgage servicers confirming PCS orders as a qualifying hardship for forbearance and loan modifications . Service members, you can check Fannie Mae and Freddie Mac websites to see if your loans are held by them or they can call hotlines for military homeowners at 1-877-MIL-4566 or 1-800-FREDDIE.