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Fannie and Freddie Set Timeline Requirements for Short Sales
By: Carrie Bay 04/17/2012
Beginning June 15, real estate agents working with distressed
homeowners whose loans are backed by Fannie Mae and Freddie Mac should
expect to receive a decision on a short sale offer within 30-60 days.
The GSEs issued new guidelines Tuesday that fall under the Servicing
Alignment Initiative rolled out last fall and aim to bring greater
transparency to the short sale process and expedite decisions related
to
these pre-foreclosure sales.
Not only is a short sale an effective foreclosure alternative when home
retention is no longer an option, but it keeps homes occupied and helps
to maintain stable communities, according to the Federal Housing
Finance
Agency (FHFA).
Addressing real estate practitioners’ No. 1 complaint about short
sales, FHFA directed Fannie Mae and Freddie Mac to establish a new
uniform set of minimum response times that servicers must follow in
order to facilitate more efficient short sale transactions.
The GSEs’ new short sale timelines require servicers to make a
decision within 30 days of receiving either an offer on a property
under
the companies’ traditional short sale programs or a completed Borrower
Response Package (BRP) requesting short sale consideration, whether
it’s through the federal government’s Home Affordable Foreclosure
Alternative (HAFA) program or a GSE program.
If more than 30 days are needed, servicers must provide the borrower
with weekly status updates and come to a decision no later than 60 days
from the date the BRP or offer was received.
According to the GSEs, this 30-day add-on will provide some leeway for
servicers who may need more time to obtain a broker price opinion (BPO)
or a private mortgage insurer’s approval for a short sale. All
decisions must be made within 60 days.
In the event a servicer makes a counteroffer, the borrower is expected
to respond within five business days. The servicer must then respond
within 10 business days of receiving the borrower’s response.
The GSEs plan to use the new short sale timelines to evaluate servicer
compliance with the Servicing Alignment Initiative.
Edward DeMarco, acting director of the FHFA, says the GSEs new borrower
communication and timeline requirements for short sales “set minimum
standards and provide clear expectations regarding these important
foreclosure alternatives.”
GSE servicers must comply with the new minimum communication time
frames for all short sale evaluations conducted on or after June 15,
2012, although servicers are encouraged to begin implementing the new
requirements sooner.
“I applaud Fannie and Freddie for finally coming out with real
guidance with real world timelines for their servicers,” commented
Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc.,
which
specializes in short sales. “There is no question that this will help
short sales and the market as a whole.”
Last year Freddie Mac completed 45,623 short sales, a 140 percent
increase since 2009. Fannie Mae’s short sale completions shot up by
101 percent over the same period, totaling around 79,800 in 2011.
. . .
Give me a call if you need additional information.
– Robin
www.realtyrobin.com
