The new 30 day rule
Both Fannie Mae and Freddie Mac have issued new guidelines that they both say are designed to improve the consistency in the short sales process and to expedite the process, but many are questioning if the new guidelines are realistic and if they can be achieved in the real world, according to the SFGate.com
So what are these changes that some call unrealistic? The new guidelines will go into effect on June 15, giving servicers 30 days to review and respond to all short sale requests and short sale offers. If the servicer deems it necessary to take more than 30 days, they must provide the borrower weekly updates and issue a final response within 60 days.
Additionally, if the borrower requests a short sale under the government’s Home Affordable Foreclosure Alternative (HAFA) program, the 30 day clock begins when the borrower submits a completed borrower response package requesting consideration of a short sale. When not requesting a short sale under HAFA, the 30 day clock begins when the borrower submits a short sale offer from a potential buyer and a completed borrower response package.
“With the average short sale nationwide taking about six months to complete, real estate agents are happy to see the new timetable but wonder if it’s realistic,” SFGate observes. Among other concerns with the expedited process is being able to handle the training and staff levels it would take servicers to rapidly handle the current volume of short sales. Consistency is another goal of Fannie and Freddie, but many have expressed concerns over this topic as well.
Another flaw being pointed out by the industry is that Fannie and Freddie fail to mention any repercussions of failing to meet the 30 day deadline. They vow to closely monitor servicers’ performance, but do not issue any penalties for failure. It is possible that this could change in the future.
Greg Cook
May 2, 2012 at 2:04 pm
Without any repercussions, what would be the servicers motivation to change their SOPs?
Roland Estrada
May 2, 2012 at 8:00 pm
Funny, I started thinking about the repercussion aspect of this before I even got to that part of the post. There is no fear of God on the part of service companies or their employees. I’ve dealt with third party service company employees that should have been fired but can almost guarantee you they weren’t. The government needs to issue a heavy handed decree – do it or you will suffer heavy financial consequences. They can do it. The IRS does it all the time.
I had a B of A negotiator tell me she still had to get approval from the MI company. Are you kidding!!! Screw those jerkoffs. Just get it done. They need a Steve Jobs figure to ride herd over these creeps. if you don’t perform, you fired!!
That goes for service companies as well. One of the worst experiences I’ve had was in dealing with AMO, a third party service company for B of A. What a bunch of incompetent, pathetic losers!!! Do I have enough exclamation points? Probably not. 😉
Jon Griffith
October 17, 2012 at 4:38 pm
Who’s to say servicers aren’t going to “lose” documentation in order to say that the home owner hasn’t submitted everything in a timely manner, thereby delaying the start of the 30 day clock, and what incentive do these companies have to follow the rules? None.