The Federal Housing Finance Agency (FHFA) has made November 2012 a month to remember as it steps up the pace for short sale approvals. The benefit of this type of sale is the limited loss by lenders, homeowners, taxpayers and the Federal government. Changing the guidelines to allow some leeway for qualification is a boon for working Americans who have been struggling to pay on their home in Tampa or elsewhere in the United States.
The opportunity to qualify for a short sale rather than defaulting on a mortgage has been a problem for many trying to keep their mortgage payment current. New rules affecting Freddie Mac and Fannie Mae short sale mortgages will enhance more equitable treatment of borrowers. Several prominent mortgage servicers will have approval authority of short sales. There will be no requirement for a sign off by Freddie Mac or Fannie Mae.
Mortgage Guaranty Insurance Corporation and Essent Guaranty Inc. are two of those companies affected by the change. The senior vice president of servicing and REO at Freddie Mac, Tracy Mooney, noted the primary role the mortgage insurers are playing by allowing more foreclosure alternatives such as short sales to take place. Taxpayer losses are reduced while the housing market recovery continues to improve.
The definition of financial hardship has been expanded. Fannie Mae and Freddie Mac mortgages are eligible for short sale upon a proven hardship, even if the mortgage is current. That includes a divorce, disability, or the death of a co-borrower or borrower. In the event of a new job or job transfer at least 50 miles away from the current home, a hardship is now considered to exist.
Military personnel permanently ordered to another duty station now qualify for short sales. Monetary penalties, including the cash contribution promissory note, are now eliminated.
There are more cases excluded from the pursuit of deficiency judgments by Freddie and Fannie. In addition, borrowers will be evaluated by servicers. Other guidelines have been designed to turn the short sale process into one uniform program. All in all, it is a positive step towards recovery.
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