The Shorter Short Sale: Long on Borrower Benefits
Because of their complexity, short sales have traditionally taken months to complete. We worked with our regulator, the Federal Housing Finance Agency, to remove obstacles and streamline the process so we can help more borrowers and reduce costs for the company and taxpayers. The end result is a shorter short sale process that’s long in benefits for borrowers:
Steps To Get Started With A Freddie Mac 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 mortgage servicer. Their telephone numbers and mailing address should be listed on your monthly statement or coupon book.
Visit our short sale resource center to learn more.
Quicker decisions. New decision time lines significantly shorten the process. Now, servicers have 30 days to make a decision once they receive a completed application, and an additional 30 days beyond that if they need more time to negotiate with third parties. A final decision is required by day 60. We estimate that the time to complete a short sale will decrease by approximately 50-75 percent.
Expanded delegations. We increased delegations to servicers so that they now have the authority to approve short sales for qualifying financial hardships for homeowners who are past due or current on their mortgage payments. In addition, servicers now have the independent authority to approve short sales without a separate and potentially time-consuming review by the mortgage insurance company.
More communication. Our short sales guidelines are designed to increase transparency into the process by keeping borrowers and realtors informed along the way. Servicers must acknowledge receipt of a completed short sale application within three days of submission. If more time is needed to review past the initial 30-day decision period, servicers must send weekly status updates.
Clear escalation process. We require all servicers to establish an escalation process and to communicate it to borrowers in writing. This includes a dedicated 800 number. Most are already including this on monthly mortgage statements.
Relocation Assistance. Homeowners can qualify for up to $3,000 in relocation assistance when the short sale is complete.
This is part of Freddie Mac’s overall commitment to helping more struggling homeowners avoid foreclosure by increasing consistency, transparency, and eligibility across our foreclosure prevention programs and requirements. Early results indicate that this program is beginning to take hold with homeowners and realtors. Beginning in March of 2013, borrowers pursuing deeds-in-lieu of foreclosure will also enjoy a new streamlined experience. Visit our Avoiding Foreclosure Resource Center to learn more.
Should You Consider A Short Sale?
If all retention options have been exhausted or are not possible, a short sale is a good alternative to foreclosure that allows distressed homeowners to gracefully leave their home and transition to more affordable housing. It's also typically less damaging to a borrower's credit report than foreclosure, and usually reduces the amount of time a borrower needs to wait to get a new mortgage down the road.
A short sale may make sense if you:
- Do not qualify for any options to keep your home, including a loan modification, forbearance, or reinstatement.
- Need to move in order to keep or obtain employment.
- Don’t think you could sell your home at a price that would cover your outstanding mortgage amount.
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