Shorter Processing Time for Short Sale Transactions

FHFA (Federal Housing Finance Agency) released last April 17, 2012 the new timelines for short sale process for Fannie Mae and Freddie Mac backed loans.  The new timelines will help home owners avoid foreclosure. 


The FHFA's new directive requires the servicers of Fannie and Freddie loans to: (Source: www.fhfa.gov)


- Review and respond to borrower requests for short sales within 30 days after receipt of a short sale offer and a complete borrower request.
- If the review is still under way after 30 days, give the borrower weekly status updates.  (This allows more time where necessary, such as where subordinate lenders and/or mortgage insurance is involved.)
- Advise the borrower of the final decision within 60 days after receipt of a short sale offer and a complete borrower request. 


In cases where the servicer makes a counteroffer, the borrower must respond within 5 business days. The servicer in return, must give its reply within 10 business days of receiving the borrower's response.


According to CNBC report, the long response time have been the no. 1 complaint in the short sale sector. It usually takes up to a year or more for a buyer to get a response which results to buyers dropping out of the transaction.  Fannie and Freddie hold hundreds of thousands of distressed loans and with the new FHFA directive, the process will be expedited. The new timelines will take effect in June.


If you have any questions about real estate, please don't hesitate to contact any of our team.  You may reach  James Team Real Estate on (907)-865-6594 or email us at patrickjameshomes@gmail.com. If you are looking for your new home, you may check out our listings at www.anchoragehomedeals.com.

Short Sale

Short Sale occurs when a property is sold and the creditor agrees to accept less than the total amount due. This means that the creditor will release the legal claim against a property used to secure the loan in exchange of the proceeds from the short sale.  However, not all creditors will accept short sales or discounted payoffs, especially, if foreclosure will be more profitable for them. And not all sellers nor all properties qualify for short sales.
 
Sometimes, when a lender wants to avoid going through the costs of foreclosure, they will allow a home buyer to purchase the home for less than the mortgage balance while the home is in pre-foreclosure stage.

Creditors grant short sales for 2 reasons: the seller is experiencing hardship and the seller owes more on the mortgage than the home is worth.  Examples of hardships are: Unemployment/reduced income; divorce; medical emergency; job transfer; bankruptcy; and death.

How to conduct a Short Sale:

1. Get in touch with a Realtor to get Comparative Market Analysis of your home's value. That way, you'll have an idea of how much your home is worth. 
2. Contact your present mortgage company and request for short sale paperwork.
3. List your home with a Realtor.

4. Complete short sale paperwork and return it to the mortgage company for review. It usually requires information regarding how much interested buyers would pay and information about the home listing with the Realtor, such as MLS number.

5. Wait for the mortgage company to review and approve the submitted paperwork.
6. If short sale paperwork is approved by the creditor, contact the Realtor where the property is listed and have them process the sale of the home.

Just a word of advice, try to request for a "Short Sale without Recourse." This allows the borrower to pay off less than the amount owed without the mortgage company suing for the difference in price.  If the borrower does not get a "Short Sale without Recourse", he/she will still be required to settle the difference between the sale price and the payoff amount.