Anyone who has been involved with a short sale has horror stories about the length of time required to close the deal. In the past, short sales could take months to close, if they closed at all. 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. Fannie Mae and Freddie Mac have listened to Real estate professionals across the country, and have established a new set of minimum response times that servicers must follow in order to facilitate a more streamlined short sale process.
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. Should a servicer require more than 30 days, an additional 30 day period is allowed, however, The servicers are required to provide a weekly status update, and a final decision must be made within 60 days.
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.”
This can only have a positive impact on the market, as there are still many distressed properties on the books, and these inevitably drive down values of neighboring homes. By streamlining the short sale process, and getting these properties off the market, we can expect to see a slow but steady rise in home values as distressed properties once again become the exception, and not the rule.