This story appeared in Bank Digest.
Government-Sponsored Enterprises Fannie Mae and Freddie Mac are issuing new, clear guidelines to their mortgage servicers to create a standard short sale program, according to the FHFA. The streamlined program rules are intended to enable lenders and servicers to quickly and easily qualify eligible borrowers for a short sale. The new guidelines, which go into effect Nov. 1, 2012, will permit a homeowner with a Fannie Mae or Freddie Mac mortgage to sell their home in a short sale even if they are current on their mortgage if they have an eligible hardship. Servicers will be able to expedite processing a short sale for borrowers with hardships such as the death of a borrower or co-borrower, divorce, disability or relocation for a job without any additional approval from Fannie Mae or Freddie Mac.
“These new guidelines demonstrate FHFA's and Fannie Mae's and Freddie Mac's commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities,” said FHFA Acting Director Edward J. DeMarco.
The new guidelines:
- streamline short sales for borrowers most in need;
- enable servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales;
- allow Fannie and Freddie to waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes;
- provide special treatment for military personnel with Permanent Change of Station orders;
- consolidate existing short sales programs into a single uniform program;
- provide servicers and borrowers clarity on processing a short sale when a foreclosure sale is pending; and
- offer up to $6,000 from Fannie and Freddie to second-lien holders to expedite a short sale.
The Single-Family Seller/Servicer Guide Bulletin, provided by Freddie, guides on the standard short sale, which, according to the FHFA, is part of its broader effort--the Servicing Alignment Initiative--to streamline Fannie and Freddie programs for short sales and other foreclosure alternatives to assist struggling homeowners.