Short sales…getting easier to receive an approval?

Homeowners may have an easier time getting short sales approved starting this month with new servicer guidelines from Fannie Mae  and Freddie Mac going into effect.

In a short sale, borrowers with underwater mortgages sell their homes to a buyer at a price that is approved by the lender. The lender normally forgives the difference between the loan and the sale proceeds- in essence, the bank is being shorted for the loan amount.

Under the new guidelines, borrowers with loans backed by the GSEs can do a short sale even if they are current on their payments if they have a "hardship" such as the death or disability of a co-borrower, illness, divorce or legal separation or distant transfer of employment. Military personnel who are being transferred will be automatically eligible for short sales.

Homeowners may be asked to make a financial contribution at the closing of the sale to prevent the lender from pursuing the deficiency from the homeowner later. Military personnel are under no obligation to contribute funds to cover the shortfall between the loan balance and the proceeds.

One of the new guidelines that will be very helpful is that the servicers are required to respond to short sales within 30 days of receipt of the offer and communicate a final decision in 60 days.

Also, Fannie Mae and Freddie Mac entered into delegation agreements with nine mortgage insurance companies that will allow the agencies to approve short sales and deeds in lieu of foreclosure on behalf of the insurance companies. The agreements are expected to reduce the "potential costs, delay and uncertainty" involved in short sale process, the companies said.

Banks have increasingly shown a preference for short sales over foreclosures as a way of dealing with delinquent loans. Long foreclosure timelines, particularly in states, like Florida, where there is a judicial foreclosure process, has been one reason. The national mortgage settlement with the biggest servicers this year also requires banks to pursue foreclosure alternatives.

We have been successful in the negotiated outcome of close to 100% of all short sales we have undertaken. I am certain that we can help you. Whether it be with moving forward on a short sale, getting you the proper and accurate information on a loan modification or refinance, or helping you determine that staying in your home and ‘toughing it out’ is your best option.

Call me, confidentially, and directly, at 561-602-1258

Thanks for reading…Steve Jackson