Tuesday, December 8, 2009
Federal Short Sale Guidance Out
Short sale procedures for loan servicers are standardized in guidelines released under the federal government's Making Home Affordable loan modification initiative for troubled home owners. The guidelines create a path for a short-sale or deed-in-lieu of foreclosure for eligible borrowers for whom loan modification isn't a viable option. The guidelines provide $1,500 in federal funds to help borrowers relocate, $1,000 to help servicers offset their processing costs, and up to $1,000 to investors to secure release of subordinate liens. For each $3 an investor pays to secure the release of a lien, the investor receives $1 in assistance. The guidelines prohibit a reduction in agreed-upon commissions (if they're not more than 6 percent) and take effect April 5, 2010, but can be implemented by servicers at any time. Fannie Mae and Freddie Mac are expected to follow this release with their own rules based on these guidelines.