Fannie Mae and Freddie Mac Short Sale Guidelines

Orrick - Finance 20/20
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On August 21, the FHFA announced that Fannie Mae and Freddie Mac are issuing guidelines to mortgage servicers to consolidate existing short sales programs into one standard program. The guidelines go into effect on November 1. The guidelines: (i) offer a streamlined approach for borrowers most in need; (ii) enable servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales; (iii) provide for Fannie Mae and Freddie Mac to waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes; (iv) offer special treatment for military personal with permanent change of station orders; (v) consolidate existing short sales programs into a single unified program; (vi) provide servicers and borrowers with clarity on processing a short sale when a foreclosure is pending; and (vii) provide that Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale. FHFA Release.

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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