With the goal of speeding up the short sale process, the Federal Housing Finance Agency (FHFA) recently issued minimum timelines for review and completion of both Home Affordable Foreclosure Alternative (HAFA) short sales and regular short sales. Although this initiative in no way guarantees an increase in approval of short sales, it does streamline the short sale process and seeks to reduce the short sale approval limbo that many buyers and sellers have experienced.
Beginning June 15, 2012, Fannie Mae and Freddie Mac servicers will be required to review and respond to short sale requests within 30 days of receipt of a short sale offer or completed Borrower Response Package (BRP).
If a servicer’s review is still pending after 30 days, the servicer must notify the borrower, within the 30 days provided, that review of the offer or BRP is still pending. Thereafter, the servicer must provide weekly updates specifying the cause of delay and must communicate a final decision to the borrower no later than 60 days following receipt of a complete offer or BRP.
If an incomplete offer or BRP is submitted, the servicer must notify the borrower of the outstanding information or documentation needed to complete the review. In the event the servicer proposes a counteroffer, the borrower must respond within five days of receipt of the counteroffer, and the servicer must then respond to the borrower’s response within 10 days.
Short sales are generally a preferred alternative to foreclosures for borrowers, lenders, and the borrower’s local community. Unfortunately, short sale lenders have notoriously moved at a frustrating pace which has resulted in unhappy buyers and anxious homeowners. The new FHFA minimum standards place clear restrictions on the amount of time servicers can take, with the goal of facilitating efficient short sale transactions and faster resolutions for distressed homeowners.
