18 Feb A Look at Freddie Mac’s New Short Sale Process
Freddie Mac’s new Standard Short Sale program has been underway for three months, but the program is finally gaining in notoriety. The GSE has been working overtime to get the word out about the program in order to grow it and bring attention to the variety of options available to borrowers.
The onus has been transferred to loan servicers, giving borrowers a bit more freedom to pursue short sale properties. The new program aims to reduce short sale timelines by 50-75%, and lenders now must stay within a 30-day timeline when issuing a decision on a short sale application. In order to do this, lenders are now being given more autonomy to review potential client applications and make decisions.
The entire program is possible because of Freddie Mac’s involvement. They obtained approval from nine mortgage insurers who said they would allow servicers to skip the normal approval process in order to reach a quicker decision about short sales. As such, lenders can now approve short sales without consulting mortgage insurance companies. Of course, this doesn’t mean they can skip determining an applicant’s financial hardship; that is still very much a part of their responsibility.
If a lender should need more time to arrive at a decision, they will be given 30 more days at most. Mooney adds, “A final decision is required by day 60.” And if a mortgage servicer runs past the initial 30-day window, they are required to stay in consistent communication with the applicant, issuing weekly updates.