FANNIE MAE SHORT SALE GUIDE LINE
The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to align existing short sales programs into one standard short sale program and issue clear
guidelines to mortgage servicers. With these changes, Fannie Mae and Freddie Mac will allow homeowners with eligible hardships to sell their home in a short sale even if they are current on their loans. FHFA, Fannie Mae and Freddie Mac are making these changes to help more homeowners avoid foreclosure, keep homes occupied and help maintain stable communities. The streamlined program rules will enable lenders and servicers to quickly and easily qualify eligible borrowers for a short sale.The programs being aligned are: Fannie Mae’s Home Affordable Foreclosure Alternative (HAFA) and proprietary short sale programs, and Freddie Mac’s HAFA and proprietary short sale programs. The current Fannie Mae and Freddie Mac HAFA programs are modeled on the U.S. Department of Treasury’s Home Affordable Foreclosure Alternative program, but with
this guidance, there will be one program offered by Fannie Mae and Freddie Mac – the Standard Short Sale/HAFA II.
Guidance will be issued by Freddie Mac August 21 and by Fannie Mae August 22 and will be effective by November 1.
• The existing mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
• The person must have a demonstrated hardship which includes:
• Death of a borrower or death of the primary or secondary wage earner in the household
• Long-term disability
• Distant employment transfer/relocation (more than 50 miles one way)
• Increased housing expenses
• Disaster (natural or man-made)
• Business failure
FHFA ANNOUNCES NEW SHORT SALE GUIDELINES:
PROGRAMS ALIGNED TO EXPEDITE ASSISTANCE TO BORROWERS
HIGHLIGHTS – THE NEW GUIDELINES:
• Offer a streamlined short sale approach for borrowers
most in need.
• Enable servicers to quickly and easily qualify certain
borrowers who are current on their mortgages for
• Fannie Mae and Freddie Mac will waive the right to pursue de?ciency judgments in exchange for a ?nancial contribution when a borrower has suf?cient income or assets to make cash contributions or sign promissory notes.
• Offer special treatment for military personnel with Permanent Change of Station (PCS) orders.
• Consolidate existing short sales programs into a single uniform program.
• Provide servicers and borrowers clarity on processing a short sale when a foreclosure sale is pending.
• Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.
• Borrowers that need to relocate more than 50 miles one way for a job, including service members with Permanent Change of Station Orders, can be current or delinquent on their mortgage to apply for a short sale.
• Borrowers who have the capacity to contribute to shortages will be asked to make a reasonable contribution toward the shortfall. However, service members with Permanent Change of Station Orders will not be asked for a contribution towards the shortage for properties purchased on or before June 30, 2012.
• Borrowers will not be eligible for a new mortgage backed by Fannie Mae or Freddie Mac for at least two years after a short sale.
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Shah Peerally is an attorney licensed in California practicing immigration law and debt settlement. He has featured as an expert legal analyst for many TV networks such as NDTV, Times Now and Sitarree TV. Articles about Shah Peerally and his work have appeared on newspapers such as San Jose Mercury News, Oakland Tribune, US Fiji Times, Mauritius Le Quotidien, Movers & Shakers and other prominent international newspapers. His work has been commended by Congress women Nancy Pelosi and Barbara Lee. He has a weekly radio show on KLOK 1170AM and frequently participates in legal clinics in churches, temples and mosques. To learn more about Shah Peerally, visit his personal blog on www.ShahPeerally.com.
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