The Federal Housing Finance Agency recently stated that Fannie Mae and Freddie Mac will offer one, standard short sale program that will allow lenders and servicers to quickly qualify eligible borrowers for a short sale of their homes. This new debt relief program takes effect Nov. 1. Under this program, Fannie Mae and Freddie Mac will:
- Offer a simpler and more efficient short sale solution for borrowers who are behind on their mortgage payments, have poor credit ratings and/or have serious economic hardships.
- Permit lenders and servicers to quickly qualify certain borrowers who are current on their mortgages for short sales but still can demonstrate financial hardship reasons, such as the death of a borrower or co-borrower, divorce, disability or relocation more than 50 miles for an employment opportunity.
- Refrain from seeking deficiency judgments against borrowers if they pay down the balance when they have the financial means. Servicers will evaluate borrowers’ potential ability to cover the difference between the loan and short-sale property price in approving the short sale.
- Automatically allow members of the armed services who are being relocated pursuant to Permanent Change of Station orders to become eligible, even if they are not behind on their mortgages. Moreover, such service members will not be obligated to make cash contributions to cover the difference between the outstanding loan balance and short sale property price.
- Offer up to $6,000 to second lien holders to expedite short sales. In the past, second lien holders would sometimes stall the short sale process by seeking higher amounts.
Distressed homeowners can seek the guidance of a bankruptcy attorney to learn more about this new government program and any other available debt relief options.
Source: Chicago Tribune, “New rules streamline short sale process,” Mary Ellen Podmolik, Aug. 30, 2012