I have been relocated by my employer but my home is underwater. If I can sell it at all, it would be a short sale. Because I have no financial hardship, is it still possible to successfully short sale my home or should I let it foreclose?
On November 1st, the Federal Housing Finance Agency (“FHFA”), which oversees Fannie Mae and Freddie Mac, put into effect new guidelines affecting all Fannie and Freddie loans, which are a significant portion of home loans in the country. Now, borrowers are not required to be delinquent on their mortgage payment if they have an “eligible hardship.” Eligible hardships include, relocation for employment of at least 50 miles, unemployment, divorce, death of a spouse, long-term disability, increased housing expenses, disaster or business failure. A significant part of the credit damage that can accompany short sales is the result of missed payments. If a borrower can avoid missing payments, this will now allow the credit damage to be significantly reduced.
Servicers of Fannie Mae or Freddie Mac loans are also now required to review and respond to all short sale offers within 30 days of the receipt of a purchase offer. Additionally, servicers are authorized to offer up to $6,000 to secure the cooperation of second lien holders.
Short sales are preferable to foreclosure for most people and these changes will have a positive effect on many short sales and will shorten the recovery time for many borrowers.
This article is provided for informational purposes only and is not intended to replace individual legal advice.