If you dreaded short sale properties or avoided them, it may be time to reconsider due to the new guidelines that going to take effect June 15.
Also, if you fear prices will drop still more than their present level, these new rules will help stabilize prices, and keep more homes from becoming foreclosure. Expect short sale to outpace foreclosure for the rest of the year.
An added positive for potential buyers, the quality of the home being brought under a short sale, will be far better than one tht went through the foreclosures process, and becomes a REO.
Let’s review a little, in a short sale, the lender agrees to take a loss on the mortgage if the seller is able to find a buyer to pay at or near the market value for the home. The seller does not make any money on the sale of the house and is able to get out from under the mortgage note without incurring the emotional and financial toll of a foreclosure and preserve total credit damage.
Short sales have become more common in recent years due to the steep decline in housing prices, which left many homeowners “underwater,” owing more on their mortgage than the current value of their home.
Lenders are notoriously slow to respond to short sale requests, and the short sale process often can drag on for months. Currently, the average time to complete a short sale is 306 days, according to data from RealtyTrac.
The new Fannie Mae/Freddie Mac guidelines should further help to shorten the time period required for a successful short sale. In addition to the mandatory 30-day review and response period, mortgage servicers will be required to inform borrowers of a decision within 60 calendar days of receiving an offer.
The specific new guidelines as of June 15 requires by the Federal Housing Finance Agency, financial institutions that service mortgages backed by Fannie Mae and Freddie Mac must:
Freddie Mac’s new short sale timelines require servicers to make a decision within 30 days of receiving either 1) an offer on a property under Freddie Mac’s traditional short sale program or 2) a completed Borrower Response Package (BRP) requesting consideration for a short sale under HAFA or Freddie Mac’s traditional short sale program. (BRPs are standardized assistance applications developed as part of the Servicing Alignment Initiative.)
If more than 30 days are needed, borrowers must receive weekly status updates and a decision no later than 60 days from the date the complete BRP is received. This will help servicers who may need more time to obtain a broker price opinion or a private mortgage insurer’s approval on a BRP or property offer.
In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response. Freddie Mac will use the new timelines to evaluate servicer compliance with the SAI and its own servicing requirements.
Under the new guidelines, servicers will be required to acknowledge receipt of a short sale offer within three business days and notify the borrower within five business days if the information is incomplete. Within thirty days, the servicer must send an evaluation notice or notify the borrower that the offer is still under review. If the offer cannot be fully evaluated within 30 days, the servicer must update the borrower on the status each week thereafter. Servicers will also be required to keep Fannie Mae apprised if a short sale evaluation takes longer than 30 days.
Thank you for reading my post on the new guildline for short Sales.
Please grade my post, leave your comments and better still, call and drop me an email with your questions and sharing your concerns. I am always glad hearing from prospective clients that want to give me their trust and used me as their advisor, for guidance, and negotiate the best deal for you.
Remember: “Pictures without the information is not the whole story” Realtor Ron W
Email: RealtorRonW@yahoo.com Home Phone: 239-349-4684 Cell: 239-209-1923
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Ronald Wolchesky, (alias Realtor Ron W)