Design Dos and Don'ts for Sellers

Newest short sale guidelines offer more options to struggling homeowners

Short sales are notorious for being complex and slow, making it difficult for those most in need, including individuals facing possible foreclosure, to sell. The good news is that guidelines have been greatly simplified and streamlined over the past year – which may benefit agents as well as sellers by potentially
expediting the closing of a home and making it easier for sellers to

Most significantly, as of November 1, 2012, guidelines were
consolidated for all Fannie Mae and Freddie Mac short sale programs into one
standard, streamlined program. Lenders can now qualify someone for a short sale
more quickly and easily, and homeowners can more easily determine if they are
eligible for a short sale. Highlights include*:
  • A borrower may qualify for a short sale, even if they are current on
    their house payments
    , if they can prove specific hardships, including: death
    of a borrower or co-borrower, unemployment, divorce or legal separation, illness
    or disability, or a distant employment transfer/relocation.
  • Borrowers can make a financial contribution at closing in exchange for the
    lender not pursuing them for a deficiency judgment later (assuming the homeowner
    has sufficient income and/or assets).
  • Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to
    expedite a short sale. (Previously lenders would often attempt to negotiate a
    higher payment from the homeowner.)
  • In certain circumstances, homeowners will be eligible to receive up to
    $3,000 in relocation assistance.
  • Military personnel who are being relocated (have Permanent Change of Station
    orders) will be offered special treatment.
These follow June guideline changes which stipulate that lenders must respond to short
sales within 30 days of receipt of the short sale offer, provide weekly updates
to the borrower, and communicate a final decision to the borrower within 60 days
of receipt of the offer.

It all adds up to more options and a smoother short sale process for homeowners who choose to take this route. Homeowners should reach out sooner rather than later to their lender if they are
considering a short sale.

For the full list of updated guidelines, read the Federal Housing Finance Agency press

Fox Business, "New Short Sales Guidelines Coming Soon – Here's Your Cheat