The Federal Housing Finance Agency
(FHFA) announced today that Freddie Mac and Fannie Mae (the GSEs) are revising
their short sale guidelines and delegating authority to their mortgage
servicers to approve short sales as of November 1. The new procedures are part of the Servicing
Alignment Initiative which the Federal Housing Finance Agency has directed the
GSEs to develop.
The streamlined program rules will
enable lenders and servicers to quickly and easily qualify borrowers, who do
not have to be delinquent on their mortgages, to qualify for short sales. As a further step to facilitate speedy sales,
both of the GSEs have authorized a payment of up to $6,000 to incentivize second
lien holders to allow the short sales to proceed.
Additional changes will make it easier
for servicers to process short sales for members of the military who must
relocate due to Permanent Change of Station orders. In these cases servicers can streamline the
process including the elimination of
back-end debt-to-income ratios and removes the obligation for borrowers to
contribute funds to cover the shortfall between the sales price and their
outstanding mortgage balance.
said that the new guidelines will move short sales forward expeditiously for
borrowers who have missed several mortgage payments, have low credit scores and
serious financial hardships because the documentation required to demonstrate
need has been reduced or eliminated.
will also be able to process short sales for borrowers who are current on their
mortgages but are facing sudden hardships such as death, divorce, disability,
or relocation of more than 50 miles for reasons of employment. Servicers will be allowed to approve short
sales in such circumstances without additional approval from Freddie Mac or
two GSEs will waive the right to pursue a deficiency judgment in exchange for
the borrower making a financial contribution to the remaining principal balance
or signing a promissory note to that effect if that borrower has the capacity
to do so.
changes will consolidate the existing short sales programs of the GSEs into a
single uniform program and provide both servicers and borrowers clarity on
processing requirements when a foreclosure sale is pending.