An announcement was made on August 21, 2012 by the Federal Housing Finance Agency (FHFA) that both Fannie Mae and Freddie Mac will be issuing new, CLEAR guidelines to the banks who service their mortgages and consolidate existing short sale programs into one “standard” short sale program. The new guidelines will take affect on November 1, 2012. This new program will replace Fannie and Freddie HAFA and proprietary short sales and be called “Standard Short Sale/HAFA II.”
Here are the new guidelines:
1. Streamlined Approach for Delinquent Borrowers.
2. Servicers Given Authority To Approve Short Sales. If death, divorce, disability or distant employment transfer (50 miles or more) servicer can approved without additional approval from Fannie or Freddie. Borrowers with these hardships do not have to be delinquent.
3. Fannie and Freddie will waive the right to pursue deficiency in exchange for cash contributions and/or promissory notes if seller has income/assets. This will apply to borrowers who are not delinquent or less than 31 days delinquent, and some borrowers over 31 days delinquent. This will not apply to borrowers who are 90 days or more delinquent and have a credit score less than 620 or military members with a permanent change of station order.
4. Service Members being relocated with Permanent Change of Station orders will automatically be considered for the standard short sale. They can be current on their payments and will not be asked for cash contributions/promissory notes.
5. Fannie Mae and Freddie Mac servicers will be required to consolidate existing short sale programs into a single uniform program. (Hallelujah!)
6. New program provides servicers and borrowers with clarity on processing a short sale when a foreclosure sale is pending.
7. Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders. The second lien holder must agree to waive the right to pursue a deficiency to receive the funds.
If you are considering a short sale and want to know more about this new short sale program please call me today.
