WASHINGTON (8/23/12)--Pending mortgage servicing guidelines that will consolidate and coordinate existing short sale programs into a single standard short sale program could be beneficial to consumers and mortgage lenders, Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said.
The Federal Housing Finance Agency (FHFA) this week announced that Fannie Mae and Freddie Mac will soon issue new short sale guidelines that will help mortgage lenders and mortgage servicers speed up the short sale process. The new guidelines are scheduled to go into effect on Nov. 1.
The new guidelines will allow homeowners with Fannie- or Freddie-held mortgages that are current on their mortgage payments to sell their homes through the short sale process, provided they have an eligible hardship. The FHFA said mortgage servicers may expedite the short sale process for mortgageholders whose spouse or home co-owner has died. Divorce, disability and job relocations of 50 miles or more will also be considered eligible hardships under the new guidelines.
Additional approval from Fannie Mae or Freddie Mac will not be needed in these cases.
Military personnel who are being relocated due to Permanent Change of Station orders would also be automatically eligible for short sales, and would not be obligated to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes, under the new guidelines, the FHFA said.
The guidelines also streamline the short sale process for homeowners that have missed several mortgage payments or have low credit scores. Fannie Mae and Freddie Mac will also be permitted to offer as much as $6,000 to second lien holders to expedite short sale closings. The guidance will also clarify when applications and sales offers must be submitted for a home sale to be considered a short sale.
Dunn noted that the guidelines raise some questions, and CUNA plans to follow up with the FHFA and review the guidelines with the CUNA Housing Finance Reform Task Force.
The short sale changes are part of the FHFA's Servicing Alignment Initiative, which seeks to aid troubled homeowners by streamlining Fannie Mae and Freddie Mac short sale and foreclosure alternative programs.
For a full FHFA release, use the resource link.