Home buyers interested in buying homes through a short sale and the people who are selling these homes received some good news in April. Freddie Mac established new timelines to expedite decisions for borrowers on the sale of their homes. Under these new guidelines, once a completed application has been submitted, a decision must be reached within 60 days. Applications can come in the form of a traditional offer or a Borrower Response Package (BRP). After 30 days, weekly updates are now required, as well. If a counteroffer is extended by the lender, response time has been regulated too, allowing borrowers 5 days and the servicer 10 days to come to a decision.
The 2011 real estate market resulted in 45,623 short sales closed nationally by Freddie Mac, an increase of 140% from the amount of short sales they serviced in 2009. According to Tracy Mooney, Senior Vice President, Single-Family Servicing and REO, of Freddie Mac, “Short sales are more complex than routine home sales since they may involve multiple parties and long-distance negotiating. Freddie Mac’s new timelines are intended to help make the decision process more transparent and timely for short-sales under the Obama Administration’s HAFA program or Freddie Mac’s traditional short-sale option.” Mooney went on to say that, the “….announcement underscores our commitment to help reduce credit losses and taxpayer risks by supporting more opportunities for sustained occupancy in our nation’s homes.”
If you are purchasing a home through the short sale process, you may need to spend more time and research in identifying the home you decide to purchase and expert help is always advised. You need an agent experienced with the short sale process as well as using a specialist in handling short sale negotiations with lenders. These people generally take a percentage of the commission paid by the bank to close the sale and they earn every penny of their commission, too. If the home you make your offer on has more than one loan against it and both loans are with the same lender you’re fine. But if they’re with different lenders you need that specialist to negotiate with the holder of the second lien, as that bank can make or break your purchase. If there is more than one loan, be prepared to wait for your transaction to move forward. The wait can be months, even if Freddie Mac is involved. There have been many streamlines put into place but time is still required. To find out more about this process from a home seller standpoint, please click here.
To find out more about the process from a buyer’s perspective give us a call and we can walk you through it. We are HFA and CDPE specialists in this process. The housing in San Mateo County did not see many loans written through Freddie Mac except in entry level locations so some of the process is different, but knowledge is king and you can never learn too much about how to buy a short sale.