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Expect to see a new wave of short sales in 2012 -- if all goes as planned.
The powers that be are on a mission to make short sales more attractive to lenders and borrowers. Fannie Mae and Freddie Mac -- which guarantee or own more than half of the outstanding mortgages in the United States -- say they are working on policy changes that will make short sales easier and more efficient.
Those changes will likely include incentives to servicers to allow borrowers to sell their houses for less than what is owed, says Tracy Mooney, Freddie Mac senior vice president of single-family servicing. She spoke Wednesday at the Mortgage Bankers Association's servicing conference in Orlando, Fla. Mooney says Freddie plans to ease the rules on documents requested from borrowers during the short sale process. It wants servicers to reach out to more struggling borrowers with solicitation offers encouraging them to short-sell their homes to avoid foreclosure.
FHFA, the federal agency that oversees Fannie and Freddie, is hungry for more short sales.
Julia Gordon, manager of single-family policy at the FHFA, or Federal Housing Finance Agency, says FHFA is about to start working with Fannie and Freddie "to improve short sales."
The changes will include "clarity around timelines, eligibility criteria ... and increased incentives," she told a crowd of mortgage servicers at a Mortgage Bankers Association conference.
If (big emphasis on if) the entities succeed, it would help many borrowers who can't afford their mortgage payments and can't sell because they are underwater. It would also encourage more buyers to look into short sales as an option, once they know they won't have to wait months to close.
While I hear it has gotten much easier to close on a short sale -- compared to the days when it took lenders a year to reply to a short sale request -- it remains a frustrating process for buyers, sellers and their agents.
Any improvements are welcome. I do hope there's something for borrowers -- and not just lenders -- in the "incentives" that the FHFA is considering.
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Very good points!