Are We Finally Ready to Streamline the Short Sale Process?

     Realtors, investors and those in the know have long advocated a streamlined approach to short sales, but this movement is only now gaining momentum.  Perhaps the industry just wasn’t ready for such innovations before now; perhaps it took time and repetition for the industry to become seasoned and suited to streamline the process. 

     Not too long ago it was Governor Brown’s passing of the Homeowner Bill of Rights which hit the news; presently it is the recent announcements from the Federal Housing Finance Agency [FHFA], with specific changes going into effect as soon as November 1, 2012.  Regardless how you slice it, it is clear that key market players are making applaud-worthy efforts to improve existing Loss Mitigation processes aimed to support the rebuilding process on both local and national levels.   

     The FHFA is the governing body of the government-sponsored entities of Fannie Mae and Freddie Mac, and announced on August 21 new short sale guidelines for Fannie and Freddie.  Fannie and Freddie existing shortsale programs will merge into one standard program.  Consolidating processes into a single, uniform program should certainly help [the industry] execute short sales more effectively and efficiently.  Additionally, Servicers will now be able to process and approve eligible short sales without having to first submit to Fannie and Freddie.  Fewer document requirements are being implemented as well for qualifying homeowners.  These innovations are hoped to have the combined effect of shortening the qualification process.

 ther highlights of this announcement include:

·         second lien holder contributions of up to $6,000 by Fannie and Freddie

·         Opportunities to short sell for current borrowers demonstrating hardship

·         Special treatment for military personnel

    Analysts believe that such innovations will make it easier for banks to quickly qualify eligible borrowers for a short sale.  As the FHFA Acting Director Edward J. DeMarco remarked, “These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities.”