Short Sales Surpass Foreclosures

This week, the number of short sales on homes surpassed foreclosure deals for the first time. Recently, banks have been approving more and more short sales, looking to take less of a hit than they would with a foreclosure. Because the status of the housing market, job market, and economy has been so poor in recent years, many people cannot afford to remain in their home, forcing banks to foreclose or complete a short sale. Banks take a bigger loss on foreclosures than short sales, and with so many people in this situation, it makes more sense for the banks to ramp up their short sales and take less of a loss in the end.

According to Bloomberg, short sales accounted for 23.9% of home purchases in January, compared to 19.7% of sales of foreclosed homes. This time last year, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

Fannie Mae, Freddie Mac Change Short Sale Approval Timeline

Fannie Mae and Freddie Mac announced this week that beginning June 15, the amount of time takes to make a decision on a short sale will be cut down from 45-80 days to 30-60 days. The changes come as a response from the Federal Housing Finance Agency (FHFA) to realtors’ top complaint about the short sale process. The FHFA set up a new set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.

The new timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP). If more than 30 days are needed, servicers must send weekly status updates to the borrower and come to a decision no later than 60 days from the date the BRP or offer was received. For more information on the updated timelines, click here.

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