FHFA announced yesterday that Fannie Mae and Freddie Mac are issuing new standardized guidelines to mortgage servicers that will make short sales of homes easier for troubled borrowers.
Under new guidelines, which will become effective on Nov. 1, homeowners with missed mortgage payments and serious financial problems will require reduced or no documentation to qualify for short sales, the FHFA said.
The guidelines also will enable borrowers who are current on their mortgages to qualify for short sales -- without additional approval from Fannie or Freddie -- if they are under serious financial hardship caused by death, divorce, disability or the need to relocate more than 50 miles for work.
The agency added that all military members with permanent-change-of-station orders will be automatically eligible for short sales, and they won’t be obligated to cover the shortfall between the outstanding loan balance and the sale price of their home.
The new guidelines also will clarify when borrowers must submit their application and a sales offer to be considered for a short sale to ensure that last-minute communications and negotiations are handled in a uniform, fair manner.
Fannie and Freddie also will offer up to $6,000 to second lien holders to expedite a short sale to prevent them from slowing down the process by negotiating for higher amounts.
Read the FHFA's press release.