Saturday, January 19, 2013

FannieMae and FreddieMac announce a few changes involving buyers and sellers of short sales...

Fannie Mae and Freddie Mac have announced the following key changes for all parties involved in a short sale. These changes apply to all Fannie Mae and Freddie Mac short sales, with an offer and without an offer. (To find out if you have a loan backed by Fannie Mae or Freddie Mac, click here. No matter which mortgage company(s) you make your payments to, your odds of having either a Fannie Mae or Freddie Mac-backed loan are pretty high.)

Title Transfer requirement change:
  • The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed.
  • After a 30 day period, and until 90 days from the date of the deed, the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price.
This applies to ANY buyer, not just an all-cash investor buyers. And the restrictions will run with the property. So investors looking to flip property -- there will be a deed restriction that pops up on your preliminary title report when you go to sell. You will not be able to get around if you want to flip these properties for a profit of more than 20% you will have to wait until day 91 after the change of ownership to enter into contract to sell.

Here is their example on how to calculate the 120%:
-Purchase Price is $100,000.00
-120% of the purchase price would be $100,000.00 x 1.2 = $120,000.00

Relocation Assistance changes: The borrower/seller may be entitled to an incentive payment of $3,000 from Fannie Mae / Freddie Mac to assist with relocation expenses following successful completion of a short sale unless:
  • The borrower/seller is required to contribute funds or execute a promissory note (this would be HIGHLY unlikely in California since legislation has prohibited that practice).
  • The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance.
  • The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the servicer. If the borrower receives relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer, the difference in the relocation assistance amount up to the $3,000 incentive maximum may be provided. If the borrower will receive relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer and the amount is equal to or greater than $3,000, no relocation incentive will be provided.
Big fun in the ever-changing world of short sales! As an agent who lists a lot of Sacramento short sales, I keep up with all of these changes...

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