April 25, 2012
Fannie Mae Sets New Short Sale Timelines
WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that it is directing servicers to expedite short sale transactions and improve transparency on short sale reviews. The new guidelines are part of the Federal Housing Finance Agency’s Servicing Alignment Initiative to better match the servicing and loss mitigation standards of Fannie Mae and Freddie Mac.
“Short sales are an important tool to help prevent foreclosures and minimize losses,” said Leslie Peeler, senior vice president, National Servicing Organization, Fannie Mae. “Short sales can be very complex transactions involving multiple parties. By requiring quicker reviews and improving servicer reporting requirements, Fannie Mae will make the process more efficient and transparent. Expediting short sales and avoiding foreclosure is in the best interests of borrowers, communities and taxpayers.”
Under the new guidelines, servicers will be required to acknowledge receipt of a short sale offer within three business days and notify the borrower within five business days if the information is incomplete. Within thirty days, the servicer must send an evaluation notice or notify the borrower that the offer is still under review. If the offer cannot be fully evaluated within 30 days, the servicer must update the borrower on the status each week thereafter. Servicers will also be required to keep Fannie Mae apprised if a short sale evaluation takes longer than 30 days.
Fannie Mae has taken a number of steps to make the short sale process more efficient, including implementing a Short Sale Assistance Desk to help real estate professionals in targeted markets work out challenges in individual short sales. Fannie Mae completed 70,025 short sales in 2011 and 69,634 in 2010.
Does anyone believe the "servicers", aka debt collectors, will respond promptly when it is NOT in their best interest? As we all should know the "servicers" make more money when a loan is delinquent so they have a vested interest in keeping the process going as long as possible. Also this gives them time to add more "fees", inspections, notifications,etc., that they know will be paid by the trust that is the beneficial owner. Usually.
in my experience letting the investors know when a specific servicer requirement has been violated is the best way to keep them accountable.
Until now there wasn't much of a investor required timeline, and when there's no guideline that's been crossed there is a tendancy to say, well we hired the servicer to service so they must be doing their jobs.
Hopefully these guidelines will give us the ability to get the investors to kick the servicers in the butts on making short sales a speedier process.