New Federal Changes to the Short Sale Process
Federal authorities have made major changes to speed up the short sale process according to a recent article in The New York Times. These changes have been issued by the Federal Housing Finance Authority, which will require Fannie Mae and Freddie Mac to respond to an initial short sale request 30 days from receiving a submission from the homeowner.
In addition, the Federal Housing Finance Authority will require lending agencies to issue a final decision to short sale buyers within a 60-day period. These changes will take Benefits of a Quicker Short Sale
Due to the popularity of short sales, our New Jersey real estate lawyers know that these changes could greatly benefit homeowners in financial distress. Traditionally, in a short sale, the homeowner is forced to wait on a final decision for an indefinite amount of time. Often, the short sale process can take up to a year, which is why the new federal requirements could have a positive impact on homeowners in default on their mortgage.
Short sales also can impact a homeowner’s credit score. For homeowners with a higher credit rating, he or she will lose fewer points on their credit score with a short sale rather than a foreclosure. Thus, it is often beneficial for homeowners worried about their credit score to take part in a short sale over a foreclosure.
In addition, mortgage lenders prefer short sales (even though the lender receives less than the total debt due on the home in a short sale) since they tend to be less expensive than foreclosures. Since foreclosures involve a cumbersome and drawn out legal process, the recent federal changes will make it easier and more advantageous for lenders to agree to a short sale.
Currently, short sales are gaining popularity among homeowners; we are seeing more short sales now than four or five years ago. Short sales accounted for over 14% of home sales in March, which represent a roughly 4% increase from short sale figures in 2010.
Our Moorestown short sale lawyers know that in New Jersey, where the foreclosure process can take up to three years to complete, the federal changes may allow homeowners to resolve their mortgage issues quicker and move on to a new life.