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Big Changes Coming For Short Sales

Short sales—long dreaded by many Buyers and Sellers alike for taking so long to conclude—may just actually become shorter, after all.

The Federal Housing Finance Agency has just announced new rules designed to speed up the Short Sale process.  In the Birmingham area, getting your home sold in a Short Sale can sometimes take 90 days or longer … but that time could wind up dropping in some cases.

Under the new guidelines, which take effect November 1st, if you own a home with a mortgage backed by either Fannie Mae or Freddie Mac, you’ll be able to sell your home in a Short Sale even if you are current on your payments, as long as you can prove a hardship.

The process of getting a Short Sale approved will be further streamlined, since, in some cases, mortgage servicers will no longer be required to gain additional approval from Fannie Mae or Freddie Mac.

Both entities will waive the right to pursue a deficiency judgement against borrowers who have sufficient income or assets if the borrower agrees to make a financial contribution or signs a promissory note.

If you have a second loan, the new rules authorize Fannie Mae and Freddie Mac to offer up to $6,000 to the second lien holder.  This may help speed up getting a Short Sale through, too, since—in the past—the process has sometimes been bogged down by second lien holders negotiating for higher settlements.

In addition, borrowers who serve in the U.S. military and who are being relocated will automatically be eligible for Short Sale approval, even if they are current on their mortgages.

The changes, backed by the National Association of Realtors, are expected to make Short Sales a more viable option for many home owners who otherwise might have faced defaulting on their loans and being Foreclosed.