FHFA Announces New Short Sale Guidelines

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On August 21, the FHFA announced new guidelines that align and merge Fannie Mae’s and Freddie Mac’s (the GSEs) short sale programs to facilitate quicker short sale processing. For mortgages owned or guaranteed by the GSEs, the consolidated guidelines, as implemented through Freddie Mac Bulletin 2012-16 and Fannie Mae Announcement SVC-2012-19, (i) reduce or eliminate the documentation borrowers must provide to demonstrate a need for a short sale, (ii) allow servicers to qualify certain borrowers for short sales—for example those based on hardship caused by death, divorce, or disability—without approval from the GSEs, even when the borrower is current, (iii) automatically qualify for short sale servicemembers receiving Permanent Change of Station Orders and borrowers who must relocate more than fifty miles for existing or new employment, (iv) waive the GSEs’ rights to pursue deficiency judgments in certain circumstances, and (v) allow the GSEs to expedite short sales by offering up to $6,000 to second lien holders. These changes take effect on November 1, 2012.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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