It has been a frequent complaint among real-estate agents, buyers and sellers alike for a long time. Banks have slowed down when it comes to the approval of short sales – sales which entail an agreement by the lender to receive an amount lower than the total mortgage amount outstanding.
Short sales in South Florida and elsewhere are typically seen as having a far superior outcome compared to foreclosure. However, determining ways to make the short-sale process more efficient while evading fraudulent sales has been challenging. For instance, a program from the Obama administration which provides incentives for participation in short sales has assisted only approximately 35,000 owners of homes as of February. Additionally, Freddy Mac claims that it has completed close to 46,000 short sales in the last year.
Those figures, however, are insignificant compared to the number of foreclosures in the United States. Solely during the month of March, over 55,000 homes were foreclosed upon per statistics from RealtyTrac, Inc.
Late on Tuesday, the federal government’s regulator overseeing Freddie Mac and Fannie Mae revealed new methods designed to make sure that interested buyers receive a fast response when they are attempting to buy a short sale.
Loan servicing professionals who collect payments for Freddie and Fannie will have 30 days to decide once an offer is received for a short sale purchase. Additionally, they are under requirements to consider an anguished homeowner’s short sale request within 30 days.
If additional time is needed after 30 days, the lender must update borrowers weekly with status information, plus they are required to make a decision within 60 days of the application’s initiation; it is an effort to give help to mortgage lenders needing time to obtain opinions on the property’s value or the mortgage insurer’s approval.
Tracy Mooney is a senior vice president with Freddie Mac who has said that short sales are more complicated than typical home sales because they might include multiple parties and the need for negotiating over long distances. Mooney has also said that the new timelines have been designed to add transparency and timeliness to the decision process.
Andrew Wilson is a spokesman for Fannie Mae, and he has stated that short sales can be complicated transactions which often involve numerous parties. He also said that homeowners, taxpayers and entire communities will benefit from a quicker and more efficient process.
Formal guidelines related to the recently introduced timelines for short sales have been issued by Freddie Mac. It is expected that Fannie Mae will follow suit soon.
The regulator for Freddie and Fannie also directed the entities to form new strategies with the intention of encouraging homeowners to steer clear of eviction by turning their property deeds over, or by signing leases to be exchanged for the deeds. In late 2009, Fannie Mae announced their so-called deed for lease program, but its success was limited.