Your Cheat Sheet to Short Sale Guidelines

By Stevie Duffin Updated on 7/28/2017

 In November 2012, the FHFA announced that both Freddie Mac and Fannie Mae were implementing new short sale guidelines for mortgage servicers. In essence, these updated guidelines fused all existing short sale programs into one unified program. 

Under the new rules, lenders are permitted to qualify individuals for short sales, and homeowners can determine if they are eligible for a short sale. 

Guidelines for homeowners:

·         Fannie Mae/Freddie Mac borrowers are allowed to do a short sale if they are current on their mortgage and have a documented hardship such as a divorce or job loss

·         Borrowers can provide finances at closing so that the lender doesn’t pursue them for a deficiency judgment at a later time

·         Military personnel who must relocate are automatically short sale eligible and do not have to contribute financially to cover the difference between the home’s sales price and the outstanding loan balance

·         Some homeowners are eligible to receive a maximum of $3,000 in location services

·         Subordinate-lien payments are capped at a maximum of $6,000 instead of having lenders attempt to negotiate higher payments from the borrower.

Guidelines for lenders:

• Respond to short sales within thirty days of the short sale offer
• Provide the borrower with weekly updates
• Communicate decision to borrower within sixty days of offer

The combination of these short sale guidelines made the difficult process of short selling a home a little easier and more streamlined.  Homeowners and lenders alike are very optimistic about these new guidelines, which were officially instituted on November 1, 2012.

Head over to our short sale page for more information!