One thing is certain in the short sale and real estate arena – changes happen. Most of the time, lately, the changes are good. We are seeing the timelines for short sale approvals shorten to more appropriate lengths (30-60 days instead of 6-12 months.)
On June 15, 2012 there are some changes that go into affect that will further help the short sale process. The Federal Housing Finance Agency (FHFA) is implementing these changes to keep the housing market moving forward.
These latest changes come under the federal program HAFA (Home Affordable Foreclosure Alternative) and will affect home mortgages that are held by Fannie Mae and Freddie Mac only; not mortgages held by other investors.
A quick aside; if you are not sure if FNMA or FHLMC holds your mortgage you can visit their respective websites, enter some information, and they will tell you if they hold your mortgage.
Freddie Mac: https://ww3.freddiemac.com/corporate/
Fannie Mae: http://www.fanniemae.com/loanlookup/
The Changes :
• They must acknowledge that documentation was received within 3 business days
• They must notify the borrower if any paperwork is missing within 5 business days
• They must review the file and respond to the borrower within 30 days for properties that are being short sold.
• If circumstances force the 30 day window to be missed they must provide weekly status updates
How this will affect home sellers and home buyers:
Overall these changes should be a benefit to both the sellers and buyers. As I speak with buyers the number one question I get asked is how long will a short sale take. Often times this question is followed up with news reports or stories from their friends of a nightmare situation involving a short sale. Truth be told, the banks have a horrible reputation about being slow. And it is well deserved.
The good news is that they are getting better. Some banks were horrible in the short sale process but now they have stream lined the process. These changes mostly affected conventional loans held by independent investors; not mortgages held by government entities.
These latest HAFA changes now commit these government agencies to respond quicker. Faster short sale timelines means we can continue to move forward with the housing recovery.
If you do not want to short sell your home but rather refinance it; please check out my article I wrote on the new HARP 2.0.