Some of the highlights of the new guidelines include (my
thoughts in italics):
- Those deemed “most in need” of a short sale will see the process move forward expeditiously, often with a reduced need – or without any need at all – for documentation of economic hardship. A step in the right direction – especially if this expedites the process for homeowners who went delinquent because Fannie or Freddie told them to.
- Allow for those with certain hardships to qualify for a short sale WITHOUT having to go delinquent on their mortgage payments prior to submitting the offer and without additional approval from Fannie Mae or Freddie Mac. Among those hardships, include: death, divorce, disability and distant employment transfer or relocation. Notably, the transfer component is for those moving 50 miles or more from their home for a job transfer or new employment opportunity. Huge. Up until now, people were being punished for good behavior and rewarded for bad behavior. Working with people who are trying to honor their obligation as opposed to telling them assistance is only available when they go delinquent, is long overdue.
- Fannie and Freddie will waive the right to pursue for the deficiency in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes. Terrible. Fannie & Freddie have taken BILLIONS of taxpayer dollars. BILLIONS!!! Until that money is repaid, not a single homeowner with a deficiency – who is current on their taxes – should have to pay a dime back towards the deficiency, unless fraudulent behavior can be proven.
- Offer special treatment for military personnel with Permanent Change of Station (PCS) orders. This was already announced a couple months ago, I suppose has been grouped in with the new guidelines. No brainier. How it took this long for this guideline to be introduced is criminal.
- Consolidate existing short sales programs into a single uniform program, which they claim will feature more clear and consistent guidelines, making it easier to process and execute short sales. Included in that will be providing servicers and borrowers clarity on processing a short sale when a foreclosure sale is pending. This is kind of vague. I’d like to see the guidelines and exactly what makes them “clear and consistent”, before I comment on them.
- Fannie and Freddie will offer up to $6,000 to second lien holders to expedite a short sale. Excellent. Too many short sales die, because second liens request too much – often, more than the borrower has – and everyone ends up losing. Increasing the payoff amount from a max of $3k to a max of $6k won’t save every deal, but it’ll certainly help close far more.
The new guidelines (in full) can be viewed at the FHFA
website, here.
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