(Fannie Mae: Short Sales vs. Foreclosures—Part 2)
Last week’s Tip discussed recent trends with Fannie Mae which result in more foreclosures, rather than allowing more Short Sales. These practices, according to various loan servicers, have been guidelines for a long time but have only recently been strongly enforced.
Another important trend with Fannie Mae is their policy of no longer releasing the deficiency for the Short Sale Seller as part of the Short Sale approval. The Borrower is losing their house and being forced to move as a result of their hardship (lost job, divorce, illness, etc.) Now with this policy, the Borrower is uncertain as to whether there will be any future collection activities on the deficiency. Most Lenders will waive the deficiency entirely or waive it for a minimal cash contribution.
Unofficially, the loan servicers are saying Fannie Mae will probably not attempt to collect the deficiency. But legally there is a five year statue of limitations from date of default. The Borrower has already suffered enough and usually has no money to pay the deficiency.
Fannie Mae needs to change their actual practices and policies. They need to adhere to their stated policy of “helping families prevent foreclosures.” Each foreclosure that can be prevented with a short sale is one less house to depress the local housing market.
PS—If you have additional information about Fannie Mae short sale or foreclosure policies please let me know.
PSS—And on top of all this, taxpayer money is being used to bail out Fannie Mae. Where’s Congress when we need them? What a mess!!
Please contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.
William D. Tucker, III, Sr. Partner
Tucker Griffin Barnes P.C.
Where deep insight equals powerful advantage!
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636