The Federal Housing Finance Agency (FHFA) announced on Tuesday that it will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale.
The new guidelines issued by Fannie Mae and Freddie Mac to their mortgage servicers will offer a more streamlined approach to the short sale process by consolidating existing short sales programs into one standard short sale program. The program rules will expand eligibility criteria of borrowers, so homeowners who are current on their mortgage payments, yet suffer from specific hardships, will be able to qualify more quickly for a short sale.
Effective Nov. 1, homeowners with a Fannie Mae or Freddie Mac mortgage will be allowed 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 death of a borrower or co-borrower, divorce, disability, increase in housing expenses, unemployment, disability, or relocation for a job, without any additional approval from Fannie Mae or Freddie Mac.
"We are pleased with the new guidelines. REALTORS® at the local, state and national level have long advocated for a more streamlined, standardized short sale process. Improving short sale eligibility will allow more families to avoid foreclosure and reduce the negative impact foreclosures have on families and communities," said Suzanne Yost, president of the Silicon Valley Association of REALTORS®.
Some specific changes include:
Additionally, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan. These changes follow FHFA's announcement in June that established strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.