If your mortgage loan is owned by Fannie Mae or Freddie Mac (regardless of to whom you make your monthly payments) big changes are coming to the way short sales are handled starting November 1, 2012. So, if you need to sell your home, and you're underwater, read on to learn about 3 important changes that may impact you!
- The new guidelines will permit a homeowner to obtain approval for a short sale EVEN IF THEY ARE CURRENT ON THEIR MORTGAGE if they have an eligible hardship.
What is an eligible hardship, you ask?
- Death of a borrower or co-borrower
- Long term or permanent disability of a borrower or co-borrower
- Divorce or legal separation
- Distant Employment Transfer
- There are also special considerations for military personnel with Permanent Change of Station (PCS) Orders.
I have seen other reports that have listed additional hardships, however, according to the Fannie Mae Guidelines any hardships other than those listed above will be looked at on a case by case basis and will require that the Servicer obtain approval from Fannie Mae. Also bear in mind that the list above is specifically for folks who are attempting a short sale while they are still CURRENT on their mortgage. The list is longer if the borrower is already in default and includes the list below as well as the list above:
- Reduction in income
- Increased housing expense
- Natural or man-made disaster
2. The new guidelines will signficantly reduce the documentation required to complete a short sale for borrowers most in need.
What qualifies as "most in need", you ask?
- More than 90 days delinquent
- Credit Score below 620
- Any of the hardships in either list above
3. Waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make such a contribution. (Let me just interject here --I have not handled a single short sale where the deficiency was not waived and, in most cases, my clients were not required to make a contribution.)
For more detailed information on these changes, see my post entitled Fannie & Freddie's New Short Sale Guidelines-Beyond The Bullet Points and, if you'd like a private consultation, please don't hesitate to contact me at 603-490-5344.