New Federal Guidelines Expedite Short Sale Process

October 23, 2012

New Federal Guidelines Expedite Short Sale Process

In August, the Federal Housing and Finance Agency announced new guidelines that aim to streamline short sales, making the process easier for both lenders and borrowers. Starting Nov. 1, owners whose loans have been purchased or guaranteed by Fannie Mae or Freddie Mac may qualify for a short sale if they have an eligible hardship. Eligible hardships include unemployment, divorce, disability, job location or a death of the borrower or co-borrower.

The following are highlights of the new guidelines:
-Homeowners who have not defaulted on their mortgage can qualify for a short sale. In the past, most short sales would not be approved unless a homeowner was seriously delinquent. The new guidelines allow servicers to approve homeowners who are current on their mortgage but have experienced an eligible hardship without further approval from Fannie or Freddie.
-The guidelines expedite short sales for homeowners who have serious financial hardships. Now, the documentation required to show serious financial hardships has been eliminated or reduced.
-There is automatic qualification for military personnel. Service members who are relocated will be automatically eligible for a short sale. Additionally, service members will not be obligated to pay any deficiency between the loan balance and the short sale price.
-The new additions provide second lien holders maximum pay-outs. Second mortgage holders have been known to hold up short sales by refusing to approve a sale because they did not like the pay-out. The new guidelines offer second mortgage holders up to $6,000 from Fannie and Freddie for sale approval.

In addition to the above, the new guidelines provide servicers and borrowers with clarity on how to handle short sales when a foreclosure is pending.

Good News for Florida Homeowners

There are a lot of Florida residents who could benefit from the new guidelines. According to CoreLogic, in the first quarter of 2012, 44 percent of Palm Beach County homeowners owed more on their mortgage than the worth of their home. According to RealtyTrac, in the first quarter of 2012, 1,777 Palm Beach County homes were sold in a short sale. This is a 53 percent increase from the fourth quarter of 2011.

Expanding eligibility for short sales to homeowners that are current on their mortgages and easing the short sale process for those in serious need may help Florida homeowners who are financially overwhelmed.

If you are considering a short sale, it is important to have an experienced attorney on your side that is knowledgeable about the procedure.

Article provided by Mascia Law Firm, P.L.
Visit us at www.mascialawfirm.com