The Federal Home Loan Mortgage Corporation (FHLMC), commonly known by its nickname Freddie Mac, is under the control of the federal government these days as the Federal Housing Finance Agency (FHFA) took over conservatorship of both Freddie Mac and Fannie Mac in September 2008. Freddie Mac is under the oversight of this federal agency.
It’s a big part of the home loan business even though home owners don’t deal with FHLMC. Freddie Mac does not lend directly to people; instead, Freddie Mac tries to boost the mortgage industry in America by buying up home loans from lenders, under the idea that buying the mortgages from the bank frees the bank to go out and make new mortgages – getting more people into the American dream of home ownership.
Freddie Mac Told to Get After Those Deficiencies in Fall 2012
You may remember Freddie Mac from some of our posts last fall — including one discussion of the FHFA pressure being placed on Freddie Mac and Fannie Mae to go after deficiencies. Since around 80% of Florida mortgages are held by Freddie Mac, this was big news and short sale lawyers were especially interested in this news considering the FHFA report was focusing upon underwater mortgages and strategic defaults. Seems Freddie Mac might get a big jump in revenue, according to FHFA, if it started going after deficiencies more often.
That FHFA report is still the law of the land in Freddie Mac’s world. So it’s very interesting to read Freddie Mac’s take on shorts sales as posted this week on its Executive Perspectives Blog.
Freddie Mac and Short Sales
This week, one of Freddie Mac’s senior vice presidents – Tracy Morgan, SVP of Single-Family Servicing and REO – posted a short article on the Freddie Mac blog entitled, ” The Shorter Short Sale: Long on Borrower Benefits.” In it, Freddie Mac VP Morgan offers great news — Freddie Mac is going to try and get those long, long short sale time periods under control. Morgan is suggesting that time could be done more than half: what has taken months to get from short sale offer to closing table may take weeks.
That’s great news for short sale mortgage borrowers and short sale buyers. Home owners welcome news that short sales will get faster. Florida needs this.
How does the new Freddie Mac Short Sale Program help speed up the Florida short sale time clock? From Morgan’s take on things:
- There will be “quicker decisions,” with a final decision by the bank on the short sale application due within 60 days.
- There will be a greater ability for mortgage servicers to approve short sales (on qualifying financial hardships).
- There are new requirements for written updates on short sales, including the servicer being required by Freddie Mac to let the borrower know that the short sale application has been received into their system within 3 days (72 hours).
Larry Tolchinsky’s Tip:
It is great news to learn that the federal government is helping Florida short sales by addressing the problems buyers and homeowners have with short sales; they take too long to close and banks or mortgage servicers drag their proverbial feet in getting the short sale deal done. Florida short sales have a reputation, well deserved, of taking time to get finalized.
So, cutting the Florida short sale time frame by half or more is a great thing. Problem is that short sales are “short.” Key to any short sale counseling, from the home owner’s perspective, is what to do about the deficiency amount. The “short” that is the difference between the amount of the mortgage and the sales price of the short sale.
It’s great for Freddie Mac to work toward getting short sales more “streamlined.” How this jives with FNFA’s dictate to go after those deficiencies to boost Freddie Mac’s internal revenue, that’s another story. Your first two questions:
Is your home loan connected to Freddie Mac? (Go here to find out.)
Is your situation going to be considered a “financial hardship” by Freddie Mac? (No clear, broad brush answer here – depends upon your situation.)
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at email@example.com, or (954) 458-8655. If you have a specific situation, please call or email Larry because he can’t answer specific fact questions in general comments. He’s happy to take your call.