The Year of the Short Sale
Chances are you have heard the term short sale before. If you are in a predicament where you owe more on your mortgage than your house is worth, you may have considered or are considering just such a short sale solution. Many New Jersey residents are in the same boat. That is why 2011 and 2012 may well be remembered as “the years of the short sale.” Through the first six months of 2012, Fannie Mae (the giant lending institution) completed 38,717 short sales, and in 2011 it completed 70,025 entirely.
To top it off, The Federal Housing Finance Agency (FHFA) recently announced there will be new guidelines going into effect Nov. 1, 2012 for Fannie Mae and Freddie Mac that will make it easier for mortgage services to consolidate all short sale programs into one streamlined approach and to better serve the sellers in a timely manner.
What these new short sale rules will do is allow lenders to more easily qualify someone for a short sale and homeowners will be able to know sooner if they are in fact eligible for a short sale.
Summary of Short Sale Guidelines
Some of the new short sale guidelines going into effect Nov. 1 are as follows:
· Short Sale Even If You Are Current On Your Mortgage – if you have a mortgage backed by Fannie Mae or Freddie Mac, the new rules state that, even if you are current on your mortgage, you could qualify for a short sale. This is if you meet the criteria for a hardship under the rules: namely, divorce or legal separation, the death of a borrower or co-borrower, illness or disability, or a distant employment transfer.
· No Deficiency- Homeowners will be able to make a financial contribution at closing in lieu of having the lender pursue them for a deficiency judgment. There are other ways to seek no deficiencies; you should consult with one of our experienced short sale lawyers to learn more.
· Military Personnel – military personnel being relocated will be automatically eligible for a short sale and will not have to be responsible for any deficiency between the sale price and the amount owed on the mortgage.
· Second Lien Holders – Subordinate lien holders will not be able to collect more than $6000. In the past these second or third lien holders would try to negotiate higher payments from the homeowner.
· Relocation Expense – You may even be able to collect up to $3000 in relocation assistance from the lender to assist in a move.
What Your Lender Must Do
The FHFA has also recently announced new guidelines for lenders. Here are a few of the more pertinent ones:
· The lender must respond to a short sale offer within 30 days of receiving such offer.
· The lender must provide weekly updates to the borrowers.
· The lender must communicate a final decision on the sale to the borrower within 60 of receipt of the offer.
Anyone facing mortgage trouble should understand these new short sale guidelines make it easier to navigate selling your home under difficult conditions, provided you have the right professional assistance.