Do you know what happens when I tell my 8 years old there are consequences to his actions, and then I never follow through? Yep, you guessed it. He keeps repeating and repeating the behavior because I haven’t penalized him for it, which is EXACTLY what Freddie Mac and Fannie Mae are doing once again.
In case you didn’t hear Freddie Mac (and yes Fannie Mae too) both sent out press releases announcing they were going to “expedite” the short sale process ONCE AGAIN. In case anyone missed my blog post earlier this year I had little hope back in April when Freddie announced that they were going to speed up the short sale process. In the press release earlier in the year, they were holding servicers to a 60-day time frame. I knew the minute this was published it couldn’t possibly be true.
If you haven’t negotiated a short sale the servicers hold all the cards. For instance, you can send in everything required for the short sale including bank statements, pay stubs, and the like, and the processor gets this information and logs it. Now here is where the issue is. If the processor doesn’t mark the file “complete” then the 30-60 days for approval don’t start ticking. SO if it takes your file 45 days to just be reviewed by a processor, then they approve it to send it to a negotiator, THEN your file starts to tick and believe me, a processor can ask for things several times over the course of a few weeks. I’ve had borrowers need to rewrite hardship letters that were over 60 days from the time it was dated. If it takes the processor that amount of time to even open and look at your file, then really, you are still looking at 3-4 months from submission to approval. NOTHING HAS CHANGED. The servicers AREN’T BEING PENALIZED for holding up the process, so they will just keep repeating the behavior.
At least Fannie Mae took the initiative and offered up a Help Desk for sales that were lagging. We can speak directly with someone at Fannie and find out exactly what a problem is with a file. You can’t do that with Freddie Mac. Freddie just redirects you back to a servicer.
We just got a file approved with US Bank that was Freddie backed and the servicer told us initially the file was sent to Freddie for approval. Well 45 days later after chasing back and forth, that was NOT the case. Freddie never got the file BUT US Bank had it show on their system that it had been sent off to Freddie. Thankfully we push and push and get to the right people, but this is why Fannie is a step above Freddie in the short sale department. You can talk to someone at Fannie and get an immediate response about a file. Freddie just redirects you back to the black hole of the servicer.
So this leads me to the August press release in which Freddie is ONCE AGAIN going to speed up short sales ***Servicers will be able to expedite processing a short sale for borrowers with hardships such as the death of a borrower or co-borrower, divorce, disability, or relocation for a job without any additional approval from Fannie Mae or Freddie Mac. ***** (http://www.fhfa.gov/webfiles/24211/ShortSalesPRFactFinal.pdf)
I’m so sorry but this is eerily similar to the April press release *** In an effort to make the short sale process more transparent, Freddie Mac is updating its timelines and also requiring servicers to provide weekly updates when decisions take more than 30 days after the receipt of a complete application for a short sale under the Obama Administration’s Home Affordable Foreclosure Alternative (HAFA) initiative or Freddie Mac’s traditional requirements. All decisions must be made within 60-days. *** (http://freddiemac.mediaroom.com/index.php?s=12329&item=127014)
Both press releases promise to speed up short sale approvals and timelines, however, in the newest announcement, Freddie seems to be giving more decision making power to the servicers. Once again it seems like Freddie issues NO PENALTY to servicers who hold up the short sale timeline, but instead just allows servicers to muddle through these slow, cumbersome sales as they always have. I see no major initiative here on Freddie Mac’s part. They are stating they will expedite a sale for SERIOUS hardships. About 90% of my sales are serious, and the sale can still drag on.
My projection is this announcement will have no effect on the speed of short sales, similar to the April announcement that was effective immediately.
It’s unfortunate that homeowners in distress have to be constantly asked for the same information multiple times through the sale, however, it’s insulting to be told things will improve over and over from Freddie and Fannie to only see it have no impact on the short sale timeline.
Maryann Little, VP Mitigation
Massachusetts Short Sale Negotiation
New Hampshire Short Sale Negotiation
Maine Short Sale Negotiation