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Edward DeMarco, the acting director of the Federal Housing Finance Agency, on Tuesday defied both the Obama administration and widespread expectations that he would cave to a torrent of political pressure and allow Fannie Mae and Freddie Mac to offer principal reductions to troubled borrowers.
July 31 -
Regulators issued new guidance Thursday designed to provide relief for military homeowners who must move quickly to comply with orders.
June 21
WASHINGTON — The regulator for Fannie Mae and Freddie Mac issued a new set of guidelines Tuesday designed to make it easier for struggling borrowers to sell their homes in a short sale.
The Federal Housing Finance Agency's standards will allow even borrowers that are current on their mortgages to participate in the program if they are under serious financial hardship caused by death, divorce, disability or having to relocate for work. The guidelines will go into effect on Nov. 1.
"These new guidelines demonstrate FHFA's and Fannie Mae's and Freddie Mac's commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities," said Edward DeMarco, acting director for the agency, in a press release. "The new standard short sale program will also provide relief to those underwater borrowers who need to relocate more than 50 miles for a job."
The new guidelines reduce or eliminate documentation required of borrowers who have missed several payments or have low credit scores in order to qualify for a short sale.
Additionally, servicers will be allowed to process a short sale for borrowers suffering under such hardships without any additional approval from Fannie or Freddie. They will also qualify if they need to relocate more than 50 miles from their home for a new job.
All military service members will also be automatically eligible for a short sale on their home and won't be obligated to cover the shortfall between their loan balance and the sale price of their home.
Servicers and borrowers will also receive guidance on when a homeowner must submit their application and when a sales offer will be considered for a short sale in order to improve any last minute communication snafus.
Additionally, Fannie and Freddie will offer up to $6,000 to second lien holders to expedite a short sale to prevent them from slowing down the process by negotiating for higher amounts.
