Newest short sale guidelines offer more options to struggling homeowners
February 6th, 2013
Short sales are notorious for being complex and slow, making it difficult for those most in need, including individuals facing possible foreclosure, to sell. The good news is that guidelines have been greatly simplified and streamlined over the past year – which may benefit agents as well as sellers by potentially expediting the closing of a home and making it easier for sellers to qualify.
Most significantly, as of November 1, 2012, guidelines were consolidated for all Fannie Mae and Freddie Mac short sale programs into one standard, streamlined program. Lenders can now qualify someone for a short sale more quickly and easily, and homeowners can more easily determine if they are eligible for a short sale. Highlights include*:
These follow June guideline changes which stipulate that lenders must respond to short sales within 30 days of receipt of the short sale offer, provide weekly updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.
- A borrower may qualify for a short sale, even if they are current on their house payments, if they can prove specific hardships, including: death of a borrower or co-borrower, unemployment, divorce or legal separation, illness or disability, or a distant employment transfer/relocation.
- Borrowers can make a financial contribution at closing in exchange for the lender not pursuing them for a deficiency judgment later (assuming the homeowner has sufficient income and/or assets).
- Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale. (Previously lenders would often attempt to negotiate a higher payment from the homeowner.)
- In certain circumstances, homeowners will be eligible to receive up to $3,000 in relocation assistance.
- Military personnel who are being relocated (have Permanent Change of Station orders) will be offered special treatment.
It all adds up to more options and a smoother short sale process for homeowners who choose to take this route. Homeowners should reach out sooner rather than later to their lender if they are considering a short sale.
For the full list of updated guidelines, read the Federal Housing Finance Agency press release.
*Source: Fox Business, "New Short Sales Guidelines Coming Soon – Here's Your Cheat Sheet."
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