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I was researching the latest bulletins from both Fannie Mae and Freddie Mac and the keys to both are 90 days delinquent and less than 620 credit score.  What happens when a borrower is more than 90 days delinquent and has a credit score of less than 620? 

• Borrowers are NOT REQUIRED (my emphasis) to make a cash contribution/promissory note
• Servicer is NOT REQUIRED (again my emphasis) to obtain or review the Borrower Response Package (aka short sale package)

Good news for folks looking to short sale their home.  Any distressed borrowers who need help in Broward county or surrounding areas in Florida please contact me!

As always please call your CPA/Accountant or the IRS for detailed info. about your specific situation.  Here is the IRS publication that deals with cancelled debt.  One of the key things distressed sellers may want to look into is insolvency.

IRS for 4681 re: Cancelled Debt

Please contact me if you are a Broward county Florida resident who has questions about short sales.

November 1, 2012 short sale changes

These changes are to streamline the short sale process and have the goal of shortening the timefram of a short sale completion.  Starting Nov. 1, 2012 even borrowers that are current on their mortgage are eligible for a short sale on loans where Fannie and Freddie are the investor-as long as a hardship still exists. Some more benefits are:

• Relief for those underwater who need to move over 50 miles for a job
• Waive right to pursue deficiency judgment in exchange for financial contribution when a borrower has sufficient income or assets to make a cash contribution or sign promissory notes
• Reduced or eliminated DOCUMENTATION for those borrowers who have missed several payments, have low credit scores and serious financial hardships
• Offer up to $6,000 to second lien holders to expedite a short sale

The last bulletpoint in my opinion may lead to a mini wave of short sale approvals PRIOR to November 1, 2012 because currently the junior lien holders receive a max of $8500 in a HAFA short sale.

Also interesting to note is that from Nov. 1, 2012 the HAFA program will be known as a Standard Short Sale/HAFA II.

However, borrowers who take advantage of a short sale will need to wait at least 2 years for a new mortgage that is backed by Fannie Mae or Freddie Mac.

Just a refresher, the Federal Housing Finance Agency (FHFA), the entity that makes these new changes is the agency that regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.  These GSEs (Government Sponsored Enterprises) provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions.

If you or someone you know is a distressed seller in South Florida, please have them reach out to me today!