Fannie and Freddie Set Timeline Requirements for Short Sales

BY: CARRIE BAY

Beginning June 15, real estate agents working with distressed homeowners whose loans are backed by Fannie Mae and Freddie Mac should expect to receive a decision on a short sale offer within 30-60 days.

The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.

Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).

Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.

The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.

If more than 30 days are needed, servicers must provide the borrower with weekly status updates and come to a decision no later than 60 days from the date the BRP or offer was received.

According to the GSEs, this 30-day add-on will provide some leeway for servicers who may need more time to obtain a broker price opinion (BPO) or a private mortgage insurer’s approval for a short sale. All decisions must be made within 60 days.

In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.

The GSEs plan to use the new short sale timelines to evaluate servicer compliance with the Servicing Alignment Initiative.

Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

GSE servicers must comply with the new minimum communication time frames for all short sale evaluations conducted on or after June 15, 2012, although servicers are encouraged to begin implementing the new requirements sooner.

“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”

Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since 2009. Fannie Mae’s short sale completions shot up by 101 percent over the same period, totaling around 79,800 in 2011.

 

Original article at http://www.dsnews.com/articles/fannie-and-freddie-set-timeline-requirements-for-short-sales-2012-04-17?utm_source=twitterfeed&utm_medium=twitter

Obama administration ramps up mortgage refinancing effort

From McClatchy News Service

WASHINGTON — The Obama administration, worried that the housing crisis is strangling the economic recovery, is stepping up efforts to aid the battered market as another wave of home foreclosures threatens to drive values down further and rattle consumer confidence again.

But the administration’s piecemeal approach — giving temporary reprieves to the jobless, converting empty homes into rental properties, allowing more people to refinance mortgages — isn’t going to help much, said industry leaders and even some lawmakers in the president’s own party. Continue reading “Obama administration ramps up mortgage refinancing effort”

July Pending Home Sales

For release:
August 23, 2011

Fewer distressed property sales in July; California pending home sales decline, C.A.R. reports

LOS ANGELES (Aug. 23) – California pending home sales dipped in July, as did the share of sales of distressed properties, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Pending home sales:

Pending home sales in California fell 1.7 percent in July, according to C.A.R.’s Pending Home Sales Index (PHSI)*.  The index was 117.0 in July, down from June’s index of 119.0, based on contracts signed in July.  The index was up 4.9 percent from July 2010.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market. Continue reading “July Pending Home Sales”

July sales and price report

For release:
August 15, 2011

LOS ANGELES (Aug. 15) – California home sales fell in July but were up from the previous year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Closed escrow sales of existing, single-family detached homes in California dropped 4.1 percent to a seasonally adjusted 458,440 units in July, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.  July home sales were up 4.5 percent from the 438,850 units sold in July 2010.  The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the July pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales. Continue reading “July sales and price report”

Is the HAFA Short Sale Program Right for You?

HAFA Pays Sellers $3,000 to do a Short Sale

By , About.com Guide

The HAFA short sale program, effective from April 5, 2010, through December 31, 2012, has been touted as the answer to every short sale agent’s nightmare. HAFA promises short sale approval within 10 days and gives the seller up to $3,000 in cash at closing. But because HAFA is a government-sponsored program, it’s a lot more complicated than that.HAFA is an acronym for Home Affordable Foreclosure Alternatives, and it’s part of President Obama’s Making Home Affordable Program. The first step is for a borrower to apply to HAMP, Home Affordable Modification Program. Here are the rules to be eligible for the HAMP program: Continue reading “Is the HAFA Short Sale Program Right for You?”

CAR Blog – Once a Short Sale’s Done, it is Done!

On Friday of last week the Governor signed C.A.R.-sponsored SB 458 (Corbett) into law! This measure, for any short sale transaction closing escrow after July 15, 2011, will prohibit deficiency judgments from being imposed after a short sale on sellers of one-to-four unit homes. Because the bill was “urgency” legislation, it took effect immediately upon signature.

Continue reading “CAR Blog – Once a Short Sale’s Done, it is Done!”

Short sale process broken, REALTOR survey finds

For release:
July 21, 2011

Short-sale process broken, pushing Central Valley families into foreclosure,
REALTOR® survey shows
Latest lender satisfaction survey highlights glaring issues in short-sale process

FRESNO, CALIF.  (July 21) – More than half of Central Valley REALTORS® characterized closing short-sale transactions as “difficult” or “extremely difficult,” according to a Lender Satisfaction Survey conducted by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  The survey gauges REALTORS®’ experience working with lenders in their most recent transaction.  The majority of those surveyed dealt with short-sale transactions – transactions in which the lender or lenders agree to accept less than the mortgage amount owed by the current homeowner. Continue reading “Short sale process broken, REALTOR survey finds”

Gov. signs SB 458 into law

For release:
July 15, 2011

CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law

LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law.   SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Continue reading “Gov. signs SB 458 into law”

Banks drag feet on short sales, survey finds

Associated Press
March 7, 2011, 10:09 p.m.

Banks are dragging their feet when considering so-called short sales, an increasingly prevalent type of real estate transaction in which lenders allow homes to be sold for less than what is owed on them, according to a survey of California real estate agents.

Nearly two-thirds of the 2,150 respondents to the California Assn. of Realtors’ survey of member agents said banks took longer than 60 days to respond to short sale offers and that fewer than three out of every five offers ultimately resulted in a sale.

The response times are much longer than those specified in government guidelines for banks who agreed to participate in programs that help troubled borrowers when they accepted a share of the $700-billion Wall Street rescue.

“The survey results show that the short sale system is clearly flawed,” CAR president Beth L. Peerce said. “Increasing the number of successful short sale transactions is one important way we can help California families and move our economy closer to recovery.”

Although the survey only covered agents in California, National Assn. of Realtors spokesman Walter Molony said similar complaints had come from across the country, especially from states with hard-hit housing markets such as Nevada, Florida and Arizona.

“Banks just have not been equipped or willing to make quick decisions on this,” Molony said. “It’s unfair to all parties concerned.”

Short sales have played an increasingly large role in California’s real estate market, with declines in property values leaving many borrowers with crushing payments on mortgages that are greater than their homes’ worth.

The transactions allow troubled borrowers to dodge the hit to their credit scores that would come from a foreclosure, while banks are able to keep distressed properties off their books without going through the costly foreclosure process.

The estimated percentage of resales in the state that were short sales went from about 10% in 2008 to 18% in 2010, according to tracking firm DataQuick Information Systems.

But foreclosures are still much more common, accounting for nearly 38% of all resales in 2010, DataQuick said.

Richard Green, who directs the USC Lusk Center for Real Estate, said the market would benefit from avoiding foreclosures, which can lead to homes languishing on the market, by encouraging more short sales.

“Forcing banks to clear the market through short sales would almost certainly get us through this faster than we’re getting through it,” he said.

Green said he suspected banks were slow to approve short sales because the transactions force them to immediately report the difference between the sale price and what they’re owed as a loss, rather than carrying the loan balance as a purported asset. He said some banks may also fear inadvertently letting property go for less than it’s worth.

Mortgage Bankers Assn. spokesman John T. Mechem did not return a phone message.

CAR had previously written to federal government agencies that oversee short sales to ask them to mandate faster responses by banks and to take other steps to foster more of the transactions.

The association said in the December letter to the Treasury and the Federal Housing Finance Agency, which oversees government-supported lenders Fannie Mae and Freddie Mac, that banks were not living up to the terms of the Home Affordable Foreclosure Alternatives’ short sale program.

Since most lenders have repaid their bailout funds to the government, participation in HAFA is now primarily voluntary, but CAR said the banks should still be bound by the agreement.

The association noted that banks were taking much longer to approve short sales than the time allotted by HAFA: Ten days in cases where the lender has already decided on a selling price; 30 days if the selling price is being proposed by a listing agent.

CAR asked for the government agencies to force banks to complete all short sales following HAFA guidelines and to comply with the program’s time frames. It also recommended increasing monetary incentives to banks for completing short sales.

Treasury spokeswoman Andrea Risotto said that her agency was still working on its response to CAR’s letter, but that some of the requests — such as punishing banks for not meeting HAFA’s time frames — would require legislative action.

A message left with the Federal Housing Finance Agency was not returned.

Original article at http://www.latimes.com/business/la-fi-short-sales-20110307,0,6800709.story