NEW SHORT SALE RULES MAY AID UNDERWATER HOMEOWNERS AND TAXPAYERS.

By Deborah Laemmerhirt | September 26, 2012

Topic Summary: Fannie Mae and Freddie Mac will allow underwater borrowers who are current on their mortgage payments to qualify for a short sale, with some fine print attached.

Come November 1st, Fannie Mae and Freddie Mac will OK short sale requests from distressed borrowers even if they the borrower is on time with payments. Historically the homeowner must have been severely delinquent in mortgage payments and lack the credit to refinance out of trouble. With this new policy, underwater homeowners may get approval for a quick response short sale request, saving all parties thousands of dollars in potential costs is the mortgage would go into foreclosure. Less foreclosures save taxpayers money in the end as the government backs up Fannie and Freddie.

First, “101 Terminology”

Underwater Loan:  A home purchase loan with a higher balance than the free-market value of the home. This situation prevents the homeowner from selling the home unless they have cash to pay the loss out of pocket. It also prevents the homeowner from refinancing in most cases.

Short Sale:  A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens’ full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.

Fannie and Freddie: Fannie Mae, and Freddie Mac, are two mortgage giants that own almost 3 out of every 4 mortgages in the United States.

Primary Lien Holder:  The new relief only applies if your mortgage is owned by Fannie or Freddie Mac. To see if your mortgage is owned by Fannie Mae, click HERE. For Freddie Mac click HERE

 

The New Criteria

In the past, the homeowner had to be severely behind in their mortgage payments in order to be even considered for a short sale approval. Next, the delays in getting short sale approval caused many potential buyers to walk away. Paperwork needed in the process always took longer than expected and the foreclosure process seemed inevitable for many owners. The new policies mandate that borrowers fall into several situations of financial distress or hardships such as:

  • divorce
  • death of a family member
  • disability
  • transfer to another part of the country.
  • Military personnel who are permanently transferred would fall under the category.
Where to Start If You Need Help: Your current mortgage servicer will probably have all the details on their web page. Or call the telephone number on your mortgage statement.

Your Real Estate Professional is a great resource in this area. He or she, is ware of the regulations and local processes.  Click Email on left side of this page to contact your HomeActions sponsor

Fast TrackApproval Time-frames:  After November 1st, Short Sale requests that homeowners make of their mortgage servicer must be acted upon in 30 days.  If borrowers are already severely delinquent there is also good news.   Fannie and Freddie will expedite short sale requests for borrowers who are at least 90 days delinquent on their payments and have a FICO credit score below 620. These homeowners will no longer have to prove a financial hardship. The current mortgage servicer will not have to get approval from Fannie Mae or Freddie Mac given the new “hardship” criteria is met.

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About Deborah Laemmerhirt

Let me assist you in finding everything you need to know about buying or selling a home! As the preeminent real estate professional in my community, I am dedicated to providing the finest service available while breaking new ground. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That’s why I constantly research the home, market and estate values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative marketing techniques to attract potential buyers. As an Internet-savvy real estate representative in Connecticut, I’ve had the opportunity to help many home buyers find their ideal homes and many sellers obtain top dollar for their homes. Buying or selling a home is one of the largest financial transactions that most people ever undertake, so I will help you through every step of the process. My goal is to make your home selling or buying experience as easy and enjoyable as possible. My services include: Explaining the home selling and buying process thoroughly Diligently selecting homes that meets your criteria Pricing your home correctly and implementing a unique yet proven marketing plan Negotiating on your behalf Tracking the closing process to ensure a smooth transaction I welcome the opportunity to address any questions you might have about buying, selling or current market conditions. Please call or e-mail me any time, and I will be happy to discuss your next steps in the buying or selling process. I specialize in both Residential and Commercial Properties. I also head a Real Estate Group to provide you with expert service and support. Areas of Expertise Making transitions in your life is challenging. You may be moving from out of town, a different state, internationally or just next door! Regardless of the distance I am prepared to respond to your unique needs.If you are a BUYER looking to downsize, up-size, want a new construction, desire a condominium, to invest, even if this is your first home, I will design a unique plan to fulfill your needs in a reasonable time frame, with the best negotiated price and the least amount of inconvenience.For my Home Sellers, I have an innovative marketing plan that will leave nothing to chance. Just call, and I would be happy to share the DIFFERENT and SUCCESSFUL TOOLS I utilize on each of my listings. I have lived in Connecticut for over 35 years. I practice Real Estate in Fairfield County, New Haven County and Litchfield County. This includes, but is not limited to Bethel, Bridgewater, Brookfield, Danbury, Harwinton, Kent, Litchfield, New Fairfield, New Milford, Newtown, Oxford, Ridgefield, Redding, Roxbury, Sherman, Southbury, Warren, Washington, Westport and Wilton.