Home buyers who have been frustrated with the short sale process will delight in the news that Fannie Mae and Freddie Mac have tightened up the time frame for the process. Now, loan servicers who take more than 30 days to issue a decision about a short-sale offer will be required to provide weekly status updates.
This is welcome news for potential buyers who used to sit idle wondering when they might receive an answer. With an end cap of 60 days, buyers will know whether or not their offer was accepted. Fannie Mae and Freddie Mac’s regulator, the Federal Housing Finance Agency, issued the tighter timelines as a way to enhance the short-sale process and help more home owners avoid foreclosure. More changes are expected by the end of the year that will look at documentation simplification, borrower eligibility and evaluation, fraud mitigation, mortgage insurance, and more.
Freddie Mac has even more specific about its new short-sale timeline, which also applies to requests from borrowers to be considered for a short sale or deed-in-lieu of foreclosure under the Home Affordable Foreclosures Alternatives (HAFA) program. They realize that some loan servicers may need more time to get a broker price opinion or the approval of a private mortgage insurer before they can respond to an offer. Now, if a loan servicer counters an offer from a prospective buyer, the borrower is expected to reply within five business days, and the loan servicer must then respond within 10 business days after receiving the borrower’s response.
The hope is to get the ball rolling again with regard to short sales instead of allowing for the log-jam that plagued so many loan servicers. The news is a welcome change for potential home buyers who will regain a bit of control in the short-sale process.
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