On Tuesday, FHFA Acting Director Edward DeMarco spoke before a symposium of the National Association of Realtors. He used the opportunity to tout the successes of the Enterprises he oversees (Fannie Mae and Freddie Mac) in helping 2.2 million distressed homeowners avoid foreclosure. And he summarized the changes to servicing protocols emerging from the recent Servicing Alignment Initiative (SAI).
Since he was addressing a room full of people who make their living selling homes, DeMarco also touched on their main topic of interest: short sales. He reiterated the new short sale timelines, announced in April, to go into effect by June:
Once the servicer receives a complete borrower short sale application and purchase offer, a decision is required within 30 days. If additional time is needed, the servicer must provide weekly updates, but in no case may a decision be delayed beyond 60 days.
And he alluded to new guidelines currently in development that could make the short sale approval process more uniform and streamlined:
… We are trying to develop policy that can be accepted by all parties, to eliminate the protracted negotiations and make very clear who is eligible for a short sale, under what terms, and what price is sufficient to make the deal work. In terms of timing, as indicated in our Strategic Plan for the Conservatorships, the aim is to complete policy decisions by the end of June, and to have new guidance drafted by the end of September.
That’s good news.
Policy changes at Fannie and Freddie take time. These behemoths "purchase or guarantee roughly $100 billion in home purchase and refinanced mortgages each month," as DeMarco points out. And, any changes must be understood and adapted by over 1,000 different servicers.
You thought your job was complicated.
Altogether, things are looking up for short sales. After six years, investors, servicers, agents and homeowners are finally getting the hang of these transactions. Could be a good year after all.
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