In June 2012, Fannie Mae and Freddie Mac, at the direction of their parent, the Federal Housing Finance Agency, implemented new guidelines designed to streamline and accelerate the short sale process. And most industry observers expect this will create a significant upward spike in short sales. The guidelines initially focus on two of the major complaints about short sales: timelines and customer communications.
Now servicers of GSE mortgages will be required to review and respond to requests for short sales within 30 calendar days of receipt of a buyer’s offer. The newly implemented June guidelines will also mandate weekly status updates to the borrower if the short sale remains under review after 30 calendar days. Servicers will also be required to inform borrowers of final decisions within 60 calendar days of receipt of an offer.
By year end, Fannie and Freddie are expected to announce other enhancements to the short-sale process, including borrower eligibility evaluation, simplified documents and payments to subordinate lien holders in an effort to provide additional tools that will help prevent foreclosures, keep homes occupied and help maintain stable markets and communities.
Risk managers believe that the greater emphasis on short sales and the new faster time frames for decisions will create new opportunities for “flopping” distressed properties and reduce the time that servicers will have to scrutinize deals.
Flopping occurs when all of the material facts are not disclosed to the lender which is why it is so important that the buyer fully disclose in writing that they are buying the property with the intent to profit.
Another reason why you should be working with professional investors who clearly operates in a clear and honest manner.
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