The first step to streamlining the way the government handles the short sale process was announced Tuesday in an official statement by the Federal Housing Finance Agency which oversees Fannie Mae and Freddie Mac.
As of June 15, new guidelines set by the FHFA go into effect requiring mortgage servicers working with distressed homeowners whose loans are backed by either of the two GSEs to meet specific timelines for communicating with troubled borrowers who may no longer be able to avoid foreclosure. The guidelines also apply to the way deeds-in-lieu of foreclosure are handled as well.
Particularly important among these new guidelines are the requirements to review and respond to requests for short sales within 30 calendar days and to make and communicate final decisions to the borrower within 60 days from receipt of a short sale offer and a complete borrower response package. Additionally, if an offer on a short sale is under review for more than 30 calendar days, the servicer is required to provide weekly status updates to the borrower.
“FHFA and the Enterprises are committed to enhancing the short sales and deeds-in-lieu process as additional tools to prevent foreclosure, keep homes occupied and help maintain stable communities,” said FHFA Acting Director Edward J. DeMarco. “These timeline and borrow communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”
Freddie Mac has gone ahead and published the specifics of the new guidelines for its servicers in its Bulletin 2012-9 titled Communication Time Lines for Short Sales dated April 17, 2012.
FHFA pointed out in its public statement that further enhancements to the short sale process will be detailed by year’s end. Those next steps in the process will address everything from borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders and mortgage insurance.
For more news and information on short sales, check out RealtyTrac’s newsroom.
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