Freddie Mac is turning down short sale closings and forcing houses into foreclosure.
The addendum requires that all parties: The closing attorney, the seller, the buyer, the Realtors and anyone who facilitated the transaction be liable for the deficiency if any mistakes were made by anyone in the chain.
Closing attorneys all over the country are refusing to close short sales with the Freddie Mac Short Sale Addendum Item 13.
Short sales are blowing up! E&O companies are refusing to insure closings if the parties sign the addendum. Well guess what? PARTIES ARE REFUSING TO SIGN THE ADDENDUM!
PARTIES, INCLUDING CLOSING ATTORNEYS AND ESCROW AGENTS, ARE REFUSING TO SIGN THE ADDENDUM!
- What has your experience been?
- Have you gotten banks and Freddie Mac to remove item 13?
Eventually this clause will be rescinded or modified to make more sense, but in the meantime many borrowers will lose their homes to foreclosure instead of selling in a short sale.
See Richard Zaretsky's blog post for the details: