Freddie Mac's New Short Sale Process 'Beginning to Take Hold'
By: Krista Franks Brock
Freddie Mac’s Standard Short Sale program has been in effect for close to three months, and the GSE continues to work to publicize the program and inform borrowers of their options, most recently in a blog post Tuesday on Freddie Mac’s website.
“Early results indicate that this program is beginning to take hold with homeowners and realtors,” stated Tracy Mooney, SVP on the Executive Perspectives Blog.
Mooney expressed an expectation that the program will reduce short sale timelines by between 50 and 75 percent.
Under the new program, servicers have more responsibility and more authority.
Servicers are allowed a maximum of 30 days after receiving a completed short sale application to decide whether they will agree to the short sale.
If they must consult third parties before making the decision, they make take at most an extra 30 days.
If the servicer will surpass the first 30 days, it must communicate with the applicant through weekly updates.
“A final decision is required by day 60,” Mooney said.
In order to ensure servicers are able to meet these shortened deadlines, Freddie Mac is now allowing servicers to approve short sales without consulting mortgage insurance companies.
The GSEs obtained approval from nine mortgage insurers a few months ago to allow servicers to forego their usual approval process in order to reach faster decisions regarding short sales.
Servicers are also responsible for determining financial hardships for short sale applicants.
In March, Freddie Mac will roll out another new program streamline the deed-in-lieu of foreclosure process.
If a homeowner is interested in pursuing a short sale, Mooney encourages him or her to determine whether Freddie Mac owns his or her loan with the Loan Look-up Tool and then reach out to his or her servicer for information on applying.
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