Fannie Mae and Freddie Mac have issued new short-sale guidelines that are set to take effect on Nov. 1.
Under the new guidelines, borrower no longer have to be in default to qualify for a short-sale as long as they can show certain types of hardships. For example, if you lose a co-borrower to death or divorce, you may be eligible for a short-sale sale before you default on the loan.
Another important addition is the limitation of pay offs to subordinate liens to about $6K. This limitation should impact the pace of short-sales by eliminating a lot of negotiation time.
Borrowers will be happy to learn that deficiencies are waived under the new guidelines for those who take the short-sale route.
These changes present homeowners facing difficulty more options and hope. But as with everything the government does it is all about implementation. We will have to wait to determine how effective these changes are for those facing default and foreclosure.
For more information see a great article here.
Disclaimer: This article is provided for informational purposes only and should not be construed in any way as legal advice. This article does not create an attorney-client relationship.