GSEs New Short Sale Policies / Servicing Guidelines

Fannie Mae and Freddie Mac announced changes to their Servicing Guides aimed at helping more borrowers avoid foreclosure through short sales and deeds-in-lieu of foreclosure (DILs).

Some of the changes are to align with certain Consumer Financial Protection Bureau (CFPB) rules and regulations that implement the mortgage servicing provisions of the Dodd-Frank Act, and some are simply to ease eligibility requirements for liquidation workout options. The new GSE requirements become effective January 10, the same effective date as the CFPB’s new mortgage servicing standards.

Documentation Exceptions. Eligibility for a short sale or DIL with borrower documentation exceptions has been expanded to include borrowers whose mortgage debts have been discharged in a Chapter 7 bankruptcy, regardless of the borrower’s FICO score. Additionally, mortgages that were originated as investment properties are no longer eligible for the exception to borrower documentation. Servicers must now review a complete Borrower Response Package (BRP) / Short Sale Package to evaluate these borrowers for a short sale or DIL.

Cash Reserves. Servicers must now submit a short sale or DIL recommendation to Freddie Mac for approval when the borrower’s cash reserves exceed $50,000.

Foreclosure Delays. Servicers and their counsel must delay the next legal action in the foreclosure process when the first complete BRP is received more than 37 days prior to the scheduled foreclosure sale date and evaluation of the package results in an offer to proceed with a short sale or DIL.

Expedited Reviews. Servicers are no longer required to conduct an expedited review when a completed BRP with a short sale purchase offer is received greater than 37 days prior to a scheduled foreclosure sale date. However, servicers must continue to expedite review of a complete BRP received between 37 days and 15 days prior to a scheduled foreclosure sale date.

Trial Period Plans. If a borrower remains eligible for the original Trial Period Plan (TPP) offer after receiving an appeal decision and accepts the original offer, servicers must reissue the original offer with a new TPP due date. Any delinquent amounts accrued during the appeal review process should be included in the modified principal balance.

If you, or someone you know is considering Buying or Selling a Home  in Columbus, Ohio please contact The Opland Group. We offer professional real  estate advice and look forward to helping you achieve your real estate  goals!

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short  Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview  Heights Granville Grove  City Groveport Hilliard Lewis Center New  Albany Pickerington Polaris Powell Upper  Arlington Westerville Worthington

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Comment by Jason Opland on December 9, 2013 at 4:36pm

[email protected] [email protected]  

[email protected] and Include: Borrowers name, property address, loan number and authorization to talk to agent. a Brief Description of problem.

Comment by Donna Perry on December 9, 2013 at 4:31pm
Yes, I have submitted 95k in repairs and photos of damage. I've disputed it online. I need to escalate this to someone with authority at Fannie Mae. Any ideas? This poor decision will put my homeowner in foreclosure, although no date set yet. This is just wrong that they totally disregard their own appraisal.
Comment by Jason Opland on December 9, 2013 at 2:44pm

Donna, have you provided the appraiser/bpo agent with a repair estimate for any damages or improvements the home requires. The banks and their investors will tell you that short sales are sold as-is and we constantly are forced to point out to them that as-is simply means the buyer has the right to inspect the home and accept it as-is or move on and that if the home is not in the same condition as the nearby comparables, adjustments need to be made to account for the repairs or improvements needed to bring the home up to par with these comps. We provide the appraisers/bpo agents with comparable sales and the repair estimate to help these individuals with their valuations as they are paid a below market rate and unfortunately as with most things you get what you pay for but in this case it's the homeowner/borrower that suffers! If you've already filed the dispute and a new valuation has already been performed you'll need to wait until the value expires. Whether this will be possible will depend on where your seller is at in the foreclosure process and whether an auction date has been scheduled. If it's a larger bank you can also file a complaint with the comptroller of currency but if the original value has been reaffirmed by the subsequent valuation, and if you failed to provide supporting documentation to reinforce your and the buyer's agent's opinion of value unfortunately there's not much that can be done.

Comment by Donna Perry on December 9, 2013 at 2:34pm
Still having trouble with Fannie Mae values. I have disputed it but they are still coming back 75k over appraised value. How do I fight this giant who is putting my homeowner into foreclosure because of false values!

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