A Fannie Mae short sale is no picnic, just ask any Sacramento short sale agent how adding an extra layer to the transaction can delay approval. Now, Fannie Mae is beginning to enforce another guideline. Fannie Mae says if a California short sale is in default -- meaning a Notice of Default has been filed and an auction date is set -- it will NOT allow a postponement of a trustee's sale. This means short sale sellers and their agents had get better those transactions approved and closed prior to that sale date or they're out of luck.
Sometimes sellers call an agent too late in the game. They wait until the Notice of Default has been filed. In the past, it wasn't that much of a problem because we could almost always count on getting the sale date postponed, but with Fannie Mae loans, it's not likely to happen anymore. In California, sellers have about 111 days after a foreclosure filing before the trustee's sale. That's about 3 1/2 months.
Many banks take at least 3 months to approve a short sale. Do you see the dilemma?
You can find out if your loan is held by Fannie Mae by going to this link to look up Fannie Mae loans.
Moreover, you must be in arrears before Fannie Mae will consider a short sale. Fannie Mae is under government control. So, the government is telling Americans to stop making their mortgage payments to do a short sale. And when the mortgage payments fall into arrears, it will foreclose and seize those homes if a seller can't close escrow within a 3 1/2 month period due to Fannie Mae's delays. It's a Catch 22. Lovely, isn't it?
A Land Park seller called me a few days ago, out of the blue and in tears. She berated herself for not finding me sooner. She was current on her mortgage and in escrow, trying to get her home in Land Park approved as a short sale. I guess her short sale agent did not realize that Fannie Mae would not approve the short sale because of her current status, so this came as a huge shock to the seller. She was trying to do the right thing and be responsible. Yet, Fannie Mae kicked her in the teeth.
Since the REALTOR Code of Ethics says I can't interfere in another agent's transaction, there wasn't much I could do for her. I get a lot of calls like that one, and it's very hard for me to refuse to give advice. It's in my nature to help people.
On the other hand, though, I've come up with a possible remedy to that delinquent mortgage payment problem for my clients (which I can't tell you because I can't give legal advice; you did a lawyer for that). Yet, there appears to be nothing that can save a seller who can't close prior to a trustee's sale date on a Fannie Mae loan. You can thank our government for that new wrinkle.
Just stick needles in my eyes, now, please. Oy.