11 Jun Short Sale Decisions Made Faster
Fannie Mae and Freddie Mac are now requiring that loan providers who need more than 30-days to decide on a short-sale provide weekly status updates and make a final decision no later than 60-days after receiving an offer.
Fannie and Freddie’s regulator, the Federal Housing Finance Agency, recently announced the new short-sale timelines. They are hoping to increase the effort to “develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.”
There are also more changes on the way that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders and mortgage insurance. Freddie Mac released more specifics on its new short-sale timeline. The program applies to offers on properties in Freddie Mac’s existing short-sale program, and also requests for borrowers to be considered for a short sale or deed-in-lieu of foreclosure under the Home Affordable Foreclosures Alternatives.
While loan services are expected to make a decision within 30 days, Freddie Mac understands that there may be circumstances where services need more time to get a broker price opinion or approval from a private mortgage insurer before it accepts an offer. If the server then makes a counteroffer, the borrower needs to respond within five business days. After that, the servicer must respond within ten business days of receiving that response.
Bank of America has also recently made some changes. The decision times on short-sale offers has been cut to no more than 20 days, down from 45 days or more. If an offer falls though, the agent then has five days to submit a backup offer, down from 14 days.