Mortgage servicers on conventional agency loans face revised deadlines for handling short-sale offers. But the effort will align short-sale requirements at the Federal National Mortgage Association with those at the Federal Home Loan Mortgage Corp.
Strategies for handling short sales, deeds-in-lieu and deeds-for-lease will need to be enhanced and aligned between Fannie Mae and Freddie Mac.
Mortgage servicers will be required to respond to short-sale requests within 30 calendar days of receiving an offer and a complete borrower response package.
The requirement was made by their conservator and regulator, the Federal Housing Finance Agency.
A reduction in foreclosures is the objective of the directive.
Bulletin No. 2012-9 from Freddie indicated that Home Affordable Foreclosure Alternatives and Chapter B65 short-sale offers must be acknowledged within three business days unless the borrower response package is incomplete, in which case the borrower must be notified within five business days.
After a month has elapsed since the short-sale offer, FHFA said servicers will need to provide weekly status updates to the borrower.
FHFA requires a final decision within 60 calendar days. Freddie’s HAFA and Chapter B65 requirement is an evaluation decision with 30 days. Weekly updates are required when the decision takes longer than 30 days, and Chapter B65 decisions can take no longer than 60 days.
Freddie said that HAFA borrowers are required to submit a request for approval of a short sale within three business days of receiving a purchase offer. Servicers are required to notify borrowers within 10 business days of determining whether the offer meets minimum acceptable net proceeds and complies with the short sale agreement.
When a HAFA counteroffer is made, the borrower needs to respond within five business days, while servicers have 10 business days to respond after receiving the borrower’s response.
The first stage of FHFA’s effort will take place in June, while Freddie’s new requirements become effective on June 15.
“By the end of 2012, Fannie Mae and Freddie Mac will announce additional enhancements addressing borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance,” FHFA said.
