GSEs, Mortgage Insurers Delegate Short Sale Authority to Servicers to Ease Process
Agreements were announced on Wednesday with
nine private insurance carriers that will make foreclosure alternatives much
quicker and easier for some Freddie Mac and Fannie Mae (the GSEs) borrowers to
obtain. Servicers will no longer have to
seek approval of private mortgage insurance (PMI) companies when borrowers with
mortgages owned or guaranteed by either GSE and carrying PMI seek a short sale
or permission to grant a deed in lieu of foreclosure.
The agreements, which become effective
on November 1, allow the GSEs to approve short sales and deeds in lieu on the
insurers' behalf. The GSEs are, in turn,
delegating these authorities to their servicers. The delegations will eliminate the separate review
required by the mortgage insurers. Freddie Mac, in announcing the agreements said
that this should reduce the potential costs, delays, and uncertainty involved
in the transactions, enabling more distressed borrowers to avoid foreclosure.
companies inked the agreements with the GSEs. They are CMG
Mortgage Insurance Company, Essent Guaranty, Inc., Genworth Mortgage Insurance
Corporation, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Radian Guaranty, Inc., Republic Mortgage Insurance Company, Triad
Guaranty Insurance Corporation, and United Guaranty Corporation.
Fannie Mae said it previously had
individual delegation agreements with the majority of its top PMI
counterparties but the standard agreement with all nine insurers would make the
approval process more consistent and efficient for servicers and borrowers.
Freddie Mac said the agreements will
build on recent Freddie Mac efforts to encourage more short sales. On
November 1, Freddie Mac's new Standard Short Sale will also go into effect,
streamlining the short sale approval process and broadening the ability of
servicers to help distressed borrowers.
Tracy Mooney, Senior Vice President,
Servicing and REO at Freddie Mac said, "We applaud the nation's mortgage
insurers for committing to work with us and our servicers to help more
borrowers obtain short sales and other foreclosure alternatives. By
paving the way for more borrowers to avoid foreclosure, today's announcement
will support the housing recovery and help reduce taxpayer losses."
"Short sales and deeds-in-lieu are important tools to prevent foreclosures
and help struggling borrowers," said Leslie Peeler, senior vice president,
National Servicing Organization, Fannie Mae. "These delegation agreements
create an even more streamlined process that will ultimately help more families
avoid the costly effects of foreclosure and benefit taxpayers. We are
pleased that the mortgage insurance companies have stepped up to the plate with
us to help more homeowners."