New Short Sales Guidelines from Fannie and Freddie…emphasis (mine) on the word “guidelines”

Fannie Mae and Freddie Mac have issued new guidelines designed to speed up short sales and make them more consistent, but I seriously question whether they are achievable in the real world of day-to-day short sales.

Under the new guidelines, which take effect June 15, servicers will have 30 days to review and respond to short sale offers or requests. If they need more than 30 days, they must provide the borrower weekly updates and a final response within 60 days.

If the borrower is requesting a short sale under the government's Home Affordable Foreclosure Alternative (HAFA) program, the clock starts ticking when the borrower submits a completed borrower response package requesting consideration of a HAFA short sale.

The servicer has 30 days - or 60 days with weekly updates - to review the request and tell the borrower whether a short sale is approved and if so at what price, according to Freddie Mac spokesman Brad German. The borrower then has to market the property.

The new guidelines specify how long the borrower and servicer have to submit and respond to offers and counteroffers. This process could take many more weeks. If the short sale is not under the government program, the clock starts ticking when the borrower submits a short sale offer from a potential buyer and a completed borrower response package.

If the servicer makes a counteroffer, the borrower has five business days to respond and the servicer must then respond within 10 business days of receiving the borrower's response.

Fannie Mae's previous guidelines "required servicers to evaluate and complete short sales, but did not require specific timelines. These new guidelines are meant to expedite the short sale process and make it more transparent," Fannie spokesman Andrew Wilson says. Wilson says banks servicing Fannie loans "are eligible for incentives for completing foreclosure prevention actions and can face compensatory fees if they fail to contact borrowers or fail to pursue foreclosure prevention. In addition, we evaluate servicers under our STAR (Servicer Total Achievement and Rewards) Program. "If servicers fail to follow our short sale, guidelines then their STAR rating could be affected."

Remember, the new guidelines don't apply to loans that are not backed by Fannie and Freddie.

Go back to the headline…GUIDELINES, not requirements. There is not much that compels these servicers to comply with these new timeframes…just some vague “their STAR rating could be affected”.

That is why it is so important to have an agent advocating for you who is personally and intricately familiar with the entire short sale process…they don’t just “take your listing” and hand of the negotiation/advocacy to some third party so they can move on to the next short sale listing.

Call me directly…lets see what can be done for you.

Steve Jackson…561.602.1258