Fannie Mae and Freddie Mac, the nation's two largest mortgagebackers, will implement their new short sale guidelines on June 15. The changes require mortgage servicers to make a decision within 30 days of receiving a short sale offer. They also must consider requests for pre-approved short sales within that same timeframe. If the lender needs more than 30 days, it must give borrowers weekly status updates and a decision within 60 days of the initial application. This extension gives lenders more time to determine the value of the property or to get the approval of a mortgage insurer. The moves are aimed at streamlining the short sale process, which often takes months to complete. Faster response times could help thousands of homeowners. Short sale transactions can get so complicated that many prospective buyers won't even consider making an offer on a short sale property. And many of those who bid often walk away from the offer because lenders take so long to make a decision. "Short sales are more complex than routine home sales since they may involve multiple parties and long-distance negotiating," said Tracy Mooney, a Freddie Mac senior vice president. The new rules "are intended to help make the decision process more transparent and timely."
Banks have also caught on to the benefit of approving short sales. Foreclosures take more time for the bank to recoup their money, and it costs upwards of $50,000 to process a foreclosure. But in the wake of the robosigning scandal, banks are more apt to help and even encourage a homeowner to pursue via a short sale. In addition to the benefits of the bank, the homeowner comes out much better in the long run. Along with a new home, their credit has been salvaged to a respectable level as opposed to letting a home go due to foreclosure. With a foreclosure it can take up to seven years for your credit to show signs of improvement.