The federal government, through the Federal Housing Finance Agency which oversees Freddie Mac and Fannie Mae, continues to find ways to resolve the Housing Crisis and news this week is that two new, big programs that are designed to help get distressed homeowners and potential strategic defaults moving forward are taking off:
1. Deed in Lieu of Foreclosures for Qualifying Underwater Mortgages
Recently, Fannie Mae and Freddie Mac announced new rules that will become effective March 1st which will provide Florida home owners current in their mortgages but in positions where they might be contemplating a "strategic default" with an alternative.
Under the new federal program, qualifying borrowers can offer Deeds in Lieu of Foreclosure on their Freddie Mac or Fannie Mae home loans and walk away from the properties without the worry of future responsibility for the deficiency.
For details, check out the Freddie Mac documentation regarding this new Rule. While this may hit the credit scores of those taking advantage of the new program beginning in March 2013, it should also help Florida home owners who have been considering their financial situation as a limbo-like existence, as they pay a monthly mortgage payment on a note that no longer reflects the reality of the Florida residential real estate values.
2. Speedy Short Sales Plan for Freddie Mac
Starting in November 2012, qualifying mortgage holders could also take advantage of the Freddie Mac Standard Short Sale program. As discussed recently by Tracy Mooney, Senior Vice President of Single-Family Servicing and REO in the Freddie Mac blog Executive Prespectives in her post, ”The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac wants to help people get shorts sales done.
Freddie Mac has changed things like creating deadlines for banks to decide on a short sale (approve/disapprove) at 60 days from the time of application in order to reach a goal of speedy short sales.
Improving the speed with which short sales are approved by mortgage lenders means that the historic time frames for Florida short sales should change. Buyers fearful of waiting months before closing on a property, for example, can now expect to have things accomplished in a matter of weeks.
As Ms. Mooney explains in her post:
This is part of Freddie Mac’s overall commitment to helping more struggling homeowners avoid foreclosure by increasing consistency, transparency, and eligibility across our foreclosure prevention programs and requirements. Early results indicate that this program is beginning to take hold with homeowners and realtors.