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 Foreclosure Alternative (HAFA) and proprietary short sale programs, and Freddie Mac’s HAFA and proprietary short sale programs. With this guidance, there will be one program offered by Fannie Mae and Freddie Mac – the Standard Short Sale/HAFA II.
The highlights of the new program are:
Eligibility requirements for the new program are:
- The existing mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
- The borrower must have a demonstrated hardship.
- Borrowers that need to relocate more than 50 miles one way for a job, including service members with Permanent Change of Station Orders, can be current or delinquent on their mortgage to apply for a short sale.
- Borrowers who have the capacity to contribute to shortages will be asked to make a reasonable contribution toward the shortfall. However, service members with Permanent Change of Station Orders will not be asked for a contribution towards the shortage for properties purchased on or before June 30, 2012.
- Borrowers will not be eligible for a new mortgage backed by Fannie Mae or Freddie Mac for at least two years after a short sale.
These new changes aim to allow homeowners to sell their homes while they are still current on their mortgage payments and avoid foreclosure. Detailed information on the new changes can be found in the attached FHFA News Release. Please contact our office if you have any questions.