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.