Freddie Mac Agrees New Short Sale Guidelines are Win for All

Investor Update: On October 25, housingwire.com published an article entitled Freddie Mac: New Short-sale Guidelines Are Win-win For Everyone

Freddie Mac: New short-sale guidelines are win-win for everyone

New short sale guidelines from Fannie Mae and Freddie Mac are designed to prevent deceptive transactions that pop up in times of distress when servicers and borrowers are negotiating short sales, representatives from Freddie Mac said in an exclusive webinar with HousingWire.com.
 
The new Federal Housing Finance Agency short sale guidelines take effect Nov. 1, prompting HousingWire to invite Ryan McGuinness, senior servicing policy analyst at Freddie Mac, and Simone Beaty, operations policy director at the GSE, to go in-depth on what servicers and borrowers can expect when the new short sale guidelines hit.

The guidelines were launched to streamline short sales while also giving servicers the power to expedite the process of identifying qualified borrowers, so they can smoothly transition into a short sale when needed.

McGuinness said the new FHFA process also will educate homeowners about their options for short sales. For example, if a borrower acts in good faith on a short sale, Freddie will not pursue deficiency, and may provide up to $3,000 in relocation assistance.

Freddie is confident the new guidelines will help root out fraud.

Since the threat of short-sale property flipping can undermine the GSEs' approach to helping distressed borrowers, all short-sales transactions are required to be arms-length deals, McGuinness and Beaty pointed out during the webinar.

Short-sales flipping occurs when a party buys a short-sale and sells it for a profit the same day, McGuinness explained. The arm's length transaction requirement is in the guidelines to prevent this type of practice. Arm's length transactions are defined as deals between parties who are independent of each other and not related by either family, marriage or commercial enterprise, McGuinness and Beaty said.

The webinar also broke down the new powers delegated to servicers in the short-sale process. A replay will be available on this page by Friday, October 26.

Servicers will have the authority to approve a standard short sale for borrowers who are 31 days or more delinquent and borrowers who are less than 31 days delinquent as long as they are facing a hardship.

If a borrower is less than 31 days delinquent and facing a hardship like divorce, death, disability or military change of station orders, servicers can submit short sale recommendations to Freddie Mac, the webinar hosts said.

HousingWire routinely hosts webinars to give our readers a more in-depth look at the many changes impacting the mortgage servicing space.

To read the online article, please click here.

Please click FHFA Short-sale Guidelines to read the announcement.

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees  and a handful of contractors performing services in the Midwest, to a national company with more than 1,600 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.

OneCommunity

Stay informed about the latest industry news and events with our All Client Alert email newsfeed.

Ask The CEO

Got a question about Safeguard in the industry? Let us know in our Ask the CEO online Q&A section.