Freddie Mac Standard Short Sale
Implemented November 1st 2012
More changes? Yes - more changes have arrived. As of November 1st, 2012, Freddie Mac Standard Short Sale was implemented. The stated purpose is to “standardize and expedite the short sale process, offering servicers a more efficient workout option for struggling homeowners.”
A further explanation states that “When a home retention option is not a viable solution for at-risk homeowners,” the Freddie Mac Standard Short Sale offers them another option to avoid foreclosure. The requirements are intended to facilitate quicker, more flexible short sale transactions. A more efficient decisioning process eliminates extra steps for Servicers when helping struggling homeowners transition to more affordable housing and eligible home buyers to purchase a home of their own. The Freddie Mac Standard Short Sale is effective for new borrower evaluations on or after November 1, 2012.”
A brief summary is presented below and all the details are available in the Freddie Mac Publication 908.
|
STANDARD SHORT |
SALE REQUIREMENTS |
| Eligible Property Types | Primary residences, investment properties, or second homes. Borrowers who are current or less than 31 days delinquent must occupy the mortgaged premises as their primary residence. |
| Eligible Mortgages | First-lien mortgages owned, guaranteed, or securitized by Freddie Mac. |
| FHA, VA, and RHS guaranteed mortgages are eligible, subject to the relevant agency’s guidelines. | |
| Borrower Eligibility | |
| Every borrower is eligible to be considered for a short sale, provided: | |
| The borrower has one of the eligible hardships in Guide Section 65.17(a) (e.g., death, divorce, disability, distant employment transfer, reduction in income). | |
| The sale is an arm’s length transaction as defined in Guide Section B65.40. | |
| The borrower did not enter into a program or arrangement where a third party takes the title to the mortgaged premises and arranges a short sale in exchange for a fee. | |
| Borrowers who are current or less than 31 days delinquent must: | |
| Occupy the mortgage premises as a primary residence. | |
| Have a monthly debt-to-income ratio greater than 55 percent (service members with Permanent Change of Station orders are exempt from this requirement). | |
| Borrowers who do not have an eligible hardship may be considered for eligibility if: | |
| There is a risk of property ownership to Freddie Mac. | |
| Litigation is pending that affects the mortgaged premises and could jeopardize a successful foreclosure sale. | |
| Other special circumstance (e.g., mortgaged premises deteriorated resulting in an unexpected decline in value). |
Real Estate professionals must be alert at all times for industry rules changes such as the Freddie Mac Standard Short Sale. Atlanta Homes ODAT Realty believes that sharing information about changes with each other allows us to give better service to homeowners.
Speaking of big changes, Richard Zaretsky explains in a post about a major change in the PNC documents for Sellers/Borrowers that will require them to pay the deficiency. Check it out.
Have a happy day -
Lynn
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