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!