Freddie Mac: Short Sale
Are you struggling to keep your home, but don’t qualify for a loan modification? Are you thinking of selling your property in order to avoid foreclosure? If your mortgage is owned by Freddie Mac, you may be eligible for our recently enhanced short sale.
A short sale is the sale of the property for less than the balance remaining on your mortgage loan. With a short sale, we will release our mortgage lien on your property once we receive the proceeds from the sale of the property, even though it is less than the loan balance you owe. Benefits to you will include avoiding foreclosure and eliminating your mortgage debt.
Freddie Mac simplifies and streamlines the short sale transactions by:
- Allowing our servicers to review and make decisions about your loan independently, speeding up the process (servicers are the organization to which you send your mortgage payments);
- Enabling more struggling homeowners to qualify by expanding the list of allowable financial hardships as well as certain other requirements;
- Offering a quicker transition out of the home and at minimal cost for service members who receive Permanent Change of Station, or PCS, orders;
- Providing a $3,000 move-out allowance for some qualified borrowers; and
- Paying off and releasing the first mortgage and resolving other mortgage debt.
Are You Eligible?
You may be eligible for the short sale option offered by Freddie Mac if:
- Your mortgage is owned by Freddie Mac (visit our Loan Look-up Tool to find out);
- You are either current or delinquent on your mortgage payments and:
- Can provide evidence of an eligible financial hardship (including PCS orders) that made your living expense go up or your income go down; and
- You didn’t qualify for a Freddie Mac loan modification or you did qualify for a loan modification but couldn’t accept it because you need to move out of your house; and
- Have not entered into a program or arrangement where a third party takes title to your property and arranges a short sale in exchange for a fee.
- You are current or less than 31 days delinquent on your mortgage, and you:
- Occupy the property as your primary residence; and
- Have a monthly debt-to-income ratio greater than 55 percent (service members with PCS orders are exempt from this requirement).
- You are more than 31 days delinquent on your mortgage (you do not have to occupy the property).
In some cases, if you have the financial ability, you may be asked to make a one-time payment or sign a new promissory note for a portion of the unpaid balance after the short sale closes.
Additional Flexibility for Service Members
Service members who receive Permanent Change of Station orders qualify for additional flexibility under our short sale, including:
- Enabling your PCS orders to be considered an eligible financial hardship;
- Eliminating the 55 percent or greater monthly debt-to-income ratio requirement if you are current or less than 31 days delinquent on your mortgage, the property is or was your primary residence, and you purchased it on or before June 30, 2012; and
- Waiving the cash/promissory note contribution requirement to close the short sale if the property is or was your primary residence and you purchased it on or before June 30, 2012.
Learn more about mortgage relief options for service members.
Steps to Get Started with a Short Sale
- Find out if Freddie Mac owns your mortgage by visiting our Loan Look-up Tool.
- If Freddie Mac owns your loan, reach out to your servicer. Their telephone number and mailing address should be listed on your monthly statement or coupon book.
Note: This material is meant to provide general information about the short sale option offered by Freddie Mac, and is not a comprehensive summary. Many specific additional terms, conditions, and limitations apply. Please contact your servicer for more detailed information about the program and eligibility requirements
Tools and Resources
- CreditSmart® Online Training
- Get the Facts on Foreclosure
- Working with Your Lender
- Find a HARP Lender
- Avoiding Foreclosure
- Getting Back on Track After Foreclosure
The Shorter Short Sale: Long on Borrower Benefits
SVP Tracy Mooney explains how the Freddie Mac short sale is getting 50-75 percent shorter.
Read the Executive Perspectives