Home > Real Estate > No Deficiency Due With New Shortsales Guidelines

No Deficiency Due With New Shortsales Guidelines

— Photo Courtesy of http://www.milwaukeeshortsale.com/

The new Shortsale guidelines from Fannie Mae and Freddie Mac will make it easier for sellers who previously did not qualify and eliminate previous problems in the past including remedy for the 2nd lienholder and  not having to prove hardships.

“Short sales have become an increasingly important tool in preventing foreclosures and stabilizing communities,” said Leslie Peeler, senior vice president, National Servicing Organization, Fannie Mae. “We want to help as many homeowners avoid foreclosure as possible. It is vital that servicers, junior lien holders and mortgage insurers step up to the plate with us. These new guidelines will open doors to help more homeowners qualify for short sales, remove barriers to completing short sales, and make the process more efficient for homeowners and servicers.”

Shortsale process is now open to non default borrowers who may face hardship death of a borrower or co-borrower, divorce or legal separation, illness or disability or a distant employment transfer starting November 1, 2012 when the  new short sale guidelines making it easier for eligibility.

“The streamlined short sales process will definitely help homeowners,” says David Liniger, Re/Max International chairman and co-founder.

“A lot of sellers and their Realtors have not been able to sort out the problems with short sales and have given up on the process because, even after sending in the correct paperwork, they have sometimes waited three or four months for their lender to respond,” Liniger says.

Servicemembers who need to relocate qualify for a shortsale.  They no longer have to pay remaining deficiency after a short sale and will automatically be qualified for short sale even if they are current in payments.  Provisions were also created for military personnel with Permanent Change of Station (PCS) orders.

One major barrier that is also being addressed is the issue with second lien holders. The second lien holder have caused  a substantial percentage of short sales failures.   To prevent second lien holders from stalling the short sale process, the GSEs will offer up to $6,000.

In addition, all servicers will have the authority to approve and complete short sales that follow the requirements without first going to the GSEs for approval. And the  GSEs will also waive their right to pursue deficiency judgments.

“These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities,” said  FHFA Acting Director Edward J. DeMarco in a statement. “The new standard short sale program will also provide relief to those underwater borrowers who need to relocate more than 50 miles for a job.”

References:

Equities.com
DSNews.com
Bankrate.com

Additional Relating Reading:

How to Make Money in Real Estate in the New Economy
Investing in Real Estate
Cash Flow Notes 2012

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