Fannie Mae and Freddie Mac Set New Short Sale Timelines

Originally Published: 5/26/2012

Please note that we have been advised that starting June 15, the Federal Housing Finance Agency has indicated that it will require Fannie Mae and Freddie Mac to give a final short sale decision within 60 days. Fannie and Freddie must also respond to initial requests for a short sale within 30 days of receiving the submission.

Please view this news with some degree of skepticism, as you should with any federally “mandated” program. For example, the clock only starts ticking (a) for HAFA programs when the borrower submits a completed package requesting consideration of a short sale, and (b) for a traditional short sale when the borrower submits a short sale offer from a potential buyer and a completed package. (The Servicing Guide Announcement can be found here.  Servicer response timelines can be found here.)

As you can imagine, how a lender defines a “completed” short sale package can vary tremendously, and lenders often use the excuse of an “incomplete” short sale package as a justification to extend other promised time frames.

These new guidelines are designed to speed up the short sale process, but we question if these time-frames are achievable.  Currently, based upon our experience, the average time-frame for short sale approval is approximately 3 to 4 months. Are lenders really staffed to immediately reduce this window by almost fifty percent?

Additionally, there does not seem to be any type of penalty, sanction, or repercussion for missing these time frames, something that is generally missing from other failed attempts to speed up or otherwise encourage short sales.

And our preliminary impressions are that lenders are struggling with this mightily.

Did you find this real estate law content useful, but need actual legal council?

Speak to a real estate attorney!

, , , , , , ,

Don’t Get Burned By Solar Panels (Or Other Leased Items)

More and more homes are running off the power of the sun these days. Renewable energy has become a trending topic and solar panels are beginning to become prevalent in the state of Florida due to positive environmental impacts and the potential to reduce large A/C bills. Selling a house with solar panels comes with…

Am I Bound or Can I Entertain Other Offers?

“Do I have a valid agreement or can I entertain other offers?” In this day and age, this a question that is becoming increasingly prevalent.  For example, you receive a call from a buyer’s agent and the agent indicates that their client has agreed to buy your listing at full price, with no contingencies, closing…

Considerations for Successful New Construction

As many of you are now seeing first hand, southwest Florida is experiencing what we in the industry call a “construction boom.”  While we welcome the increase in new construction, it is important to remember that not all construction companies have fully recovered from the housing collapse.  In fact, several local construction companies filed bankruptcy and…

Time to Get Your Head Out of the Sand and Pursue that Short Sale

Most everyone is familiar with the terms “strategic default” and “deficiency balance.”  In fact, over the years Berlin Patten has repeatedly addressed the importance of getting legal representation in foreclosure actions, short sales, and debt negotiation.  However, we have seen countless instances of people choosing to essentially bury their heads in the sand and ignore…

The New Foreclosure Legislation is Now Law and Affects More Than Just Foreclosures

On July 1, 2013, many revisions to the Florida foreclosure statutes went into effect. While many of the new provisions are technical in nature and primarily effect attorneys practicing foreclosure law, the overall effect is a dramatic change in the foreclosures process and the rights of struggling homeowners. Also, most of the changes are retroactive,…

Issues to Consider Before Signing a Construction Contract

With the recent issues involving high profile builder/contractor financial challenges, and with the proliferation of buyers who are considering new home construction, we have received a number of inquiries lately about adequately negotiating construction contracts to best protect anyone who wants to build a new home. While there is no substitute for engaging a qualified…

Bankruptcy Follow-up: Short Sales Post Bankruptcy

Originally Published by Berlin Patten on October 12, 2012 With the proliferation of bankruptcy filings over the last several years, we have received a number of inquiries regarding the completion of a short sale following a bankruptcy.  Yes, there are lawyers who may suggest that a homeowner who has been discharged from a bankruptcy (and…

Removal of Second Mortgages in Chapter 7 Bankruptcy Cases

Previously, the general rule in bankruptcy was that if a homeowner wanted to “strip off” or remove a second mortgage, he or she could only do so in a Chapter 13 bankruptcy.  However, that has now changed. In McNeal v. GMAC Mortg., LLC (In re McNeal), 2012 U.S. App. LEXIS 9589 (11th Cir. 2012), the…

FREC Comments on Real Estate Licensees’ Involvement in Short Sales

The Florida Real Estate Commission met to discuss the unlicensed practice of law (UPL) and real estate licensees’ role during a short sale transaction.  The outcome of the discussion is in the attached announcement from FREC.  Please contact our office if you have any questions.    ORLANDO, Fla.  The Florida Real Estate Commission (FREC) met…

Issues with Designating Seller as “Owner of Record”

Originally Published: 9/3/2012 One trend we have noticed recently is an increasing number of new purchase contracts with “Owner of Record” designated as the seller.  For several reasons, we do not encourage sellers’ agents to complete contracts with this designation, or for buyers to sign contracts without the full legal name of the seller listed.…

FHFA Announces New Standard Short Sale Guidelines for Fannie and Freddie

Originally Published: 8/22/2012 The Federal Housing Finance Agency has directed Freddie Mac and Fannie Mae to align current short sale programs into one standard short sale program and issue clear guidelines to service providers.  These changes will become effective on November 1, 2012. Per the FHFA, the programs being aligned are: Fannie Mae’s Home Affordable…

CRSP-12 and CRSP-12 Addendums Debut

Originally Published: 8/10/2012 Effective August 20, 2012, the FAR-9 Contract will be replaced with the Contract for Residential Sale and Purchase (CRSP-12). In addition, the Comprehensive Addendum (FARA-10) will be replaced with the CRSP-12 addenda. Please see the attached link to the summary list of the changes between the FAR-9 Contract and the CRSP-12 Contract.…

Short Sales and FIRPTA Witholding

Originally Published: 8/3/2012 Foreign Sellers who complete a short sale may be subject to the withholding requirements of the Foreign Investment in Real Property Tax Act, also known as FIRPTA. FIRPTA is particularly important to understand if you are a working on any transaction in which a “foreign person” is selling property in the United…

Bank of America – Enhanced Relocation Program

Originally Published: 7/12/2012 Bank of America is continuing to promote their enhanced relocation program (launched in May of 2012) that offers delinquent mortgage holders additional assistance with relocation expenses at the completion of a their short sale. Qualified homeowners who initiate a Preapproved Price Short Sale (without an offer) could be eligible to receive $5,000…

Home Affordable Foreclosure Alternatives (HAFA) Short Sale Update

Originally Published: 6/19/2012 Effective June 1, 2012, the following changes were implemented in the HAFA Program: TIME FRAME EXTENDED: The program has been extended to Dec. 31, 2013. The HAFA short sale can be initiated up to Dec. 31, 2013; however, the transaction must have a closing date on or before Sept. 30, 2014. ELIGIBILITY…

Florida Power of Attorney Statutes – Understanding the Recent Changes

Originally Published: 6/1/2012 In October, 2011, several changes were made to Florida Statutes dealing with the Powers of Attorney.  Some of the more material provisions and/or changes thereto are as follows: Generally speaking, a power of attorney executed in Florida that is to be used to convey real property must have two witnesses and a…

“Collected” Funds

Originally Published: 4/25/2012 You might have noticed that more and more closing agents are requiring wire transfers from buyers to fund closings. Berlin Patten was forced to recently adopt this practice. Please note that no closing agent who has adopted this practice is doing so because they want to. Due to changes in banking regulations,…

Bank of America Process Changes

Originally Published: 4/13/2012 Several Florida legislature bills, including HB 213, are attempting to make Florida a non-judicial foreclosure state, which would allow banks to foreclose on properties in certain instances without filing a lawsuit or otherwise using the judicial process. This may preclude homeowners from the opportunity to defend foreclosure, which many experts believe is…

Deficiency – What is it and How Much Time Does My Bank Have to Sue?

Originally Published: 3/27/2012 When an underwater home is sold in a short sale or a foreclosure, the greatest concern is almost always over the remaining mortgage balance owed by the homeowner (known as a “deficiency balance”) and how long the lender has to try to collect it.  When a property is sold in short sale,…

How Bankruptcy Can Backfire on Homeowners in Foreclosure

Originally Published: 3/12/2012 Many homeowners resort to filing bankruptcy in order to stop an imminent foreclosure on homestead property when no other legal options are available.  While, in most cases, the mortgage holder can still foreclose on the property, it cannot do so until the property is released from the bankruptcy estate.  This can take…

BOA’s Florida Enhanced Short Sale Relocation Assistance Extended to Dec. 12

Published December 2, 2011 Bank of America is still encouraging distressed homeowners to consider a short sale as a viable option for avoiding foreclosure, as the Florida Enhanced Short Sale Relocation Assistance Program has been extended to Dec. 12, 2011. This program offers enhanced relocation assistance to help encourage homeowners to engage with Bank of America on…
Menu