Officially Freddie Mac says short sales are getting much shorter. Freddie has launched the Standard Short sale program which they claim will speed up the short sale process and make it easier and more transparent.
Tracy Mooney, Freddie Mac official, recently wrote, “We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent.”
The changes at Freddie Mac include:
- Mortgage servicers have 30 days to make a decision once they receive a short sale application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days.
- Mortgage servicers are required to acknowledge they received the short sale application within three days of submission and must provide weekly status updates.
- Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments.
- Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
- Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance.
It is not just Freddie Mac who is streamlining their short sale process. Most lenders, especially the big ones, like Wells Fargo, Bank of America and Chase have, over the past year, developed online systems to process short sales faster and easier. When we first started doing short sale at MagnumOne Realty, the lenders treated us like criminals who were trying to steal from them. Today they refer to us as partners.
Should you consider a short sale and when to they make sense?
If your goal is to stay in your home and all retention options have been exhausted or not possible, a short sale is a good alternative to foreclosure. It allows distressed homeowners to gracefully leave their home and move to more affordable housing. It is less damaging to your credit report than a foreclosure and reduces the amount of time a borrower needs to wait to get a new mortgage down the road.
Short sales are also extremely beneficial if you need to sell a home which is valued at less than the current mortgage balance. Short sales are commonly approved for borrowers who are not in financial distress but have legitimate reasons to sell their home. We have completed short sales for a variety of reasons including divorce and job transfers. In addition we have successfully completed short sales for families who need a larger home, smaller home and or have other reasons for moving.
A short sale may make sense if you:
- Do not qualify for any options to keep your home, including a loan modification, forbearance, or reinstatement.
- Need to move in order to keep or obtain employment or have other legitimate reasons for moving
- Don’t think you could sell your home at a price that would cover your outstanding mortgage amount.
