Fannie Mae and Freddie Mac are tightening up their timelines when it comes to short sales and REO’s. Now, loan servicers that need more than 30 days to make a decision on a short-sale are required to provide weekly status updates and give a yes or no within 60 days after receiving an offer. The Federal Housing Finance Agency who regulate Fannie Mae and Freddie Mac announced the changes to help more homeowners avoid foreclosures.
These changes will take effect immediately, and more are expected to be in place by the year’s end including those that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance. The new short-sale timeline is tight with just 30 days before a loan servicer must make a decision, and Freddie Mac expects that some will need more time.
“Short sales are more complex than routine home sales since they may involve multiple parties and long-distance negotiating,” said Tracy Mooney, Freddie Mac senior vice president, single-family servicing and REO, in a statement. “Freddie Mac’s new timelines are intended to help make the decision process more transparent and timely for short sales under the Obama administration’s HAFA program or Freddie Mac’s traditional short-sale option.”
Bank of America has also stepped up to the plate announcing that their decision time on short-sale offers has been cut to no more than 20 days. Previously, some decisions took 45 days or longer.
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