The Federal Housing Finance Agency recently announced new guidelines intended to streamline the process by which mortgage services may qualify eligible borrowers for a short sale.
A short sale occurs when a homeowner sells for less than the amount he or she owes on the mortgage, and the mortgage lender agrees to forgive the difference. The FHFA hopes that the procedure will help homeowners in Tennessee and across the country who are struggling with their debt management and seeking foreclosure alternatives.
Previously, short sales required homeowners to produce extensive documentation of need. Under the new FHFA guidelines, that documentation has been reduced or eliminated. Owners may now qualify if they have missed several mortgage payments, have low credit scores or are in serious financial distress. Owners may also qualify by showing that an enumerated hardship applies. Examples include the death of a borrower or co-borrower, divorce, disability, or work-related relocation.
Two of the big players in the mortgage services industry, Fannie Mae and Freddie Mac, both have government-sponsored enterprises for short sales. For homeowners with Fannie or Freddie mortgages, the new guidelines will allow them to sell their homes in a short sale even if they are current on their mortgages, provided they qualify with an eligible hardship.
What this post illustrates is that the laws available to consumers struggling with debt management, overdue mortgage payments, or other financial hardship are constantly changing. An attorney can advise you on the most current legal options and strategies for bringing your finances back under control.
Source: CBS News, “Feds move to speed home ‘short sales’,” Aug. 21, 2012
- Our firm handles situations similar to the one discussed in this post. If you would like to learn more about our practice, please visit our Memphis Stopping Foreclosure page.