New Timelines Take Effect in June
April 17, 2012
Washington, DC – The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure. The effort will come in stages with the first taking place this June. The new, aligned timelines include the requirement that mortgage servicers review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer.
“FHFA and the Enterprises are committed to enhancing the short sales and deeds-in-lieu process as additional tools to prevent foreclosure, keep homes occupied and help maintain stable communities,” said FHFA Acting Director Edward J. DeMarco. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”
With the alignment, servicers will be required to do the following:
- review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;
- provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days;
- make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package
By the end of 2012, Fannie Mae and Freddie Mac will announce additional enhancements addressing borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.
*My two cents: First, it’s about time. Second, it’s about time. If you read the language, this still gives banks plenty of ways to stall. While it puts in place response times and attempts to cap the final approval or denial date, it does nothing to increase transparency otherwise. For the average buyer and seller, the short sale approval process is shrouded in mystery and decisions are made with little to no explanation, or communication, for that matter. We can only hope that this speeds the process up, thus easing the pain a tad for all sides involved.