New Short Sale Guidelines for Fannie Mae and Freddie Mac will be Implemented Beginning November 1st, 2012

Just a quick reminder that the new Short Sale guidelines for Fannie Mae and Freddie Mac will be implemented beginning November 1st, 2012. The stated purpose of these guidelines is to move the short sale process along while addressing foreclosure avoidance and community stabilization.

Note a few highlights of these guidelines:

– Short Sale borrowers 90 days or more delinquent / credit score lower than 620 no longer be required to provide hardship documentation

– Short Sale relief to those underwater borrowers who need to relocate more than 50 miles for a job

– To prevent second lien holders from stalling the short sale process, the GSEs will offer up to $6,000

– Enabling servicers to approve a short sale for borrowers who are not in default but face certain hardships including the death of a borrower or co-borrower, divorce or legal separation, illness or disability or a distant employment transfer

– Military personnel who are required to relocate will automatically be eligible for short sales even if they are current. They also won’t be obligated to contribute funds to pay for the remaining deficiency

We have heard, that Fannie has been extremely difficult with pricing short sales. In some cases coming back with counter proposals that are as much as 20% higher than current value.