Short Sales to Get Faster With Fannie, Freddie

August 22, 2012

The Federal Housing Finance Agency announced Tuesday that it is issuing new guidelines that set out to more quickly qualify borrowers and speed up the short-sale process. 

Among the new guidelines, home owners with a mortgage backed by Fannie Mae or Freddie Mac will be able to sell their home in a short sale even if they are current on their mortgage, assuming they can prove a hardship. Eligible hardships often include death of a borrower or co-borrower, divorce, disability, or job relocation (such as a job transfer or new employment 50 miles away from their current home). 

The new FHFA guidelines also permit mortgage servicers to speed up the processing of short sales for borrowers with eligible hardships without needing 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,” FHFA Acting Director Edward J. DeMarco said in a public statement. 

Also among the new guidelines: 

-- Military service members who are being relocated will automatically be eligible for short sales, even if they are current on their mortgages.

-- Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments for borrowers who short sale who have sufficient income or assets and can make a financial contribution or sign a promissory note. 

-- Freddie Mac and Fannie Mae will offer up to $6,000 to second lien holders in order to quicken the pace of a short sale. “Previously, second lien holders could slow down the short sale process by negotiating for higher amounts,” according to the FHFA.

The new guidelines will go into effect Nov. 1.

The National Association of REALTORS® worked with the FHFA and the government-sponsored enterprises in creating the new short sale guidelines. NAR applauded the FHFA’s approval of the guidelines.

“REALTORS® appreciate the FHFA’s efforts to increase the number of short sale approvals, which limit the losses incurred by home owners, lenders, the federal government and taxpayers,” says Moe Veissi, NAR president. “We hope these new guidelines will allow many more hardworking American home owners that would have previously been denied a short sale to now be approved and avoid defaulting on their mortgage loan.”

For more information on the new guidelines, visit

Source: Federal Housing Finance Agency and the National Association of REALTORS®

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