New Program Promises to Streamline Short Sales
Ask any residential real estate veteran, they’ll tell you.
Short sales are a good option for some home buyers in part because the properties typically sell for less than non-distressed homes.
But buyers who bid on a short sale better buckle in and steel themselves for a bumpy ride. Yes, the deals can save a little money but often it take months, even a year, to complete – frustrating hurdles involving the lender can feel endless.
Some observers have said the time it takes to complete a short sale is one factor delaying the local housing market’s recovery.
But now the Federal National Mortgage Association is trying to change that in hopes that streamlining the short sale process will prevent foreclosures, help stabilize home prices and give the market a boost.
The government backed entity, better known as Fannie Mae, recently introduced an expanded program its calling “HomePath for Short Sales.”
Once a deal is agreed upon, Fannie Mae under the program will “directly engage with the agent or servicer to address challenges such as valuation disputes, delays by servicers or uncooperative subordinate lien holders,” according to the firm.
In short, Fannie Mae promises to help complete the deals as quickly as possible.
Agents also can use HomePath to receive a recommended list price before the property hits the market. Often in a short sale a buyer and seller will agree upon a price, only to see it rejected by the lender or servicer.
By having Fannie Mae approve the price before the home is listed, that disruption can hopefully be avoided.
A short sale is when the property sells for less than what is owed on the mortgage.
A government-sponsored enterprise, Fannie Mae doesn’t give loans but it does securitize, or buy mortgages from lenders, thus allowing the lender, in theory anyway, to make more loans and continue pumping liquidity into the market.
“By giving agents a straightforward, transparent way to escalate short sale issues to Fannie Mae, we will close more sales, prevent foreclosures and help neighborhoods continue to recover,” Jay Ryan, vice president for real estate sales at Fannie Mae, said in a statement.
Fannie Mae has already tried to address challenges involving short sales by reducing timelines, expanding eligibility and prohibiting servicers from reducing agent commissions, all of which can delay or squash a short sale.