The Federal Housing Financing Agency is Making Great Strides for Borrowers

In a recent news release, The Federal Housing Financing Agency gave word of new short sale guidelines for Fannie Mae and Freddie Mac servicers. The changes are set to go into affect November 01, 2012 and are meant to clarify and expedite the short sale process. The announced alterations are as follows:

1) Homeowners with a Fannie Mae or Freddie Mac mortgage will be permitted to sell their home in a short sale even if they are current on their mortgage if they have an eligible hardship, such as death of a borrower or co-borrower, divorce, disability, or relocation for a job, unemployment, business failure, etc., all without special approval from Fannie Mae or Freddie Mac;

2) Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes, whereby servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale;

3) Special treatment will be provided to military personnel with Permanent Change of Station (PCS) orders; and

4) Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.

All of the changes hint to incredible strides forward for borrowers, especially the provision that indicates borrowers will be considered without default and the limit on contributions to second lien holders. They are claimed to create a single, uniform short sale procedure, with specific rules or timelines when a foreclosure sale is looming. Borrowers that short sell will not be eligible for a Fannie Mae or Freddie Mac loan for two years thereafter.

Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:

• http://www.FannieMae.com/loanlookup or calling 800-7Fannie (8 am to 8 pm ET)

• https://www.FreddieMac.com/corporate/ or 800-Freddie (8 am to 8 pm ET)

Kristy Black, JD MBA

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