These days, both borrowers and lenders are looking more towards short sales as a foreclosure alternative. With close to 40,000 short sales already completed this year through Fannie Mae, the Federal Housing Finance Agency is announcing new rules to help streamline the process.
Efficiency Is Key
The new guidelines for Fannie and Freddie are designed to consolidate all short sale programs into one streamlined program. The idea is to allow borrowers to determine their eligibility for a short sale and lenders to qualify borrowers for a short sale with greater ease. Starting November 1, 2012 the new guidelines are as follows:
- Borrowers holding Fannie or Freddie backed mortgages will be automatically eligible for a short sale if they have experienced a death of a co-borrower, divorce from a co-borrower, disability or illness, or are required to transfer for employment.
- Borrowers will be able to pay off a deficiency balance at the time of closing rather than be pursued legally for the balance at a later time.
- Borrowers who are military personnel who are relocated will be eligible with no obligation to pay the deficiency balance upon sale of the home.
- Borrowers are now eligible to receive up to $3,000 in relocation assistance upon sale of the home.
Lenders will also be under new rules that will require them to:
- Respond to offers within 30 days.
- Provide weekly updates as the status of an offer.
- Communicate the final decision within 60 days from receiving an offer.