Starting today, Nov. 1, 2012, new short sale guidelines spearheaded by the
Federal Housing Finance Agency (FHFA) go into effect. The new rules impact all
mortgages under the federally controlled Fannie Mae and Freddie Mac.
One part of the change allows a handful of the nation’s larger mortgage servicers to
approve a short sale without needing Fannie or Freddie to sign off on it.
Servicers include in the agreement are:
• CMG Mortgage Insurance
• Essent Guaranty Inc.
• Genworth Mortgage Insurance
• Mortgage Guaranty Insurance Corporation
• PMI Mortgage
• Radian Guaranty, Inc., Republic Mortgage Insurance
“We applaud the nation’s mortgage insurers for committing to work
with us and our servicers to help more borrowers obtain short sales and other
foreclosure alternatives,” says Tracy Mooney, senior vice president, servicing
and REO at Freddie Mac. “By paving the way for more borrowers to avoid
foreclosure, today’s announcement will support the housing recovery and help
reduce taxpayer losses.”
In addition to quicker short sale approval,
other changes become effective today. They including new guidelines for
homeowners hit by a financial hardship, moved by the military or held back by a
home’s second mortgage:
• Borrowers facing an approved hardship don’t
have to be delinquent.
• Service members with Permanent Change of Station
orders have greater flexibility, including the elimination of back-end
debt-to-income ratios or a cash contribution promissory note.
Mae and Freddie Mac won’t pursue deficiency judgments in certain cases under new
rules. Servicers will evaluate borrowers as part of the short sale approval
• FHFA gave servicers more consistent guidelines to process and
execute short sales, and consolidate existing short sales programs into a single
• Fannie Mae and Freddie Mac will offer up to $6,000 to
second lien holders to expedite a short sale.