New Short Sales Rules – Cheat Sheet

New Short Sales Rules – Cheat Sheet Recently the Federal Housing Finance Agency announced that both Fannie Mae and Freddie Mac are issuing new guidelines for mortgage servicers that will essentially consolidate all short sale programs into one streamlined program. These updated short sale program rules will allow lenders to qualify someone for a short sale, and homeowners will more easily be able to tell if they are eligible for a short sale. Under the new guidelines going into effect Nov. 1: – Homeowners with a mortgage backed by Fannie Mae or Freddie Mac will be able to do a short sale even if they are current on their mortgage if they have an eligible hardship such as the death of a borrower or co-borrower, divorce or legal separation, illness or disability, or a distant employment transfer. – Homeowners will be able to make a financial contribution at closing in exchange for the lender not pursuing them for a deficiency judgment later (assuming the homeowner has sufficient income and/or assets). – Milita ry personnel who are being relocated will be automatically eligible for a short sale and will be under no obligation to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes. – Subordinate-lien payments will be limited to $6,000. Previously lenders would often attempt to negotiate a higher payment from the homeowner. – In certain circumstances, homeowners will be eligible to receive up to $3,000 in relocation assistance. New guidelines for lenders The FHFA also recently announced that lenders: – Must respond to short sales within 30 days of receipt of the short sale offer. – Must provide weekly updates to the borrower. – Must communicate a final decision to the borrower within 60 days of receipt of the offer.