Under new guidelines set down by Fannie Mae and Freddie Mac, underwater borrowers who are seeking to sell their homes for less than what they owe must now receive decisions from their lenders within 60 business days. But if they are not careful, floundering borrowers can cause delays beyond the two-month deadline.
Contact the appraisers at www.scappraisals.com for short sale values.
The new rules, which took effect June 15, apply only to loans owned or rolled into securities by Fannie and Freddie. But because the two mortgage giants are the main conduits between primary lenders and investors in mortgages, their precepts cut a wide swath.
More than 10 million homeowners are said to be underwater with their mortgages. Not all want to get out. Many are content with their current situations and have no intention of moving, at least for now. Others continue to hold on in hopes that values will start rising again.
Unfortunately, others need to go, and many of them would rather sell at a loss through a short sale — a loss their lenders would have to absorb — than have their homes taken away.
The new 60-day rule became necessary because lenders were taking an inordinate amount of time to make up their minds — eight months on average at one point, according to RealtyTrac, a foreclosure data firm. It took so long to receive an answer that many would-be buyers became tired of waiting for a decision and went elsewhere.
But borrowers need to realize that the rules cut both ways. While lenders are required to adhere to faster timelines, borrowers also must do their part. Otherwise, they can short-circuit their own short sale.
A decision can be delayed, for example, if all the paperwork the lender requires has not been supplied. If something as simple as a photocopy of a driver’s license is missing, a borrower might have to start the process over, says Steven Horne of Wingspan Portfolio Advisors, a firm that services nonperforming loans.
Consequently, Horne and others agree that the most important thing a borrower can do is engage the services of a real estate professional or attorney who has experience in short sales, preferably with their particular lender. Not to bash rookies, but now is not the time to allow someone to cut his or her teeth on a deal.
Disclaimer: for information and entertainment purposes only