I have not been recommending short sales to my clients, not only because it really is not much better on your credit score (if at all) than a foreclosure, but also because it can also be a long and frustrating process that often does not result in a successful sale. Well, the second reason may well change in the next few months for those of you that have Fannie Mae or Freddie Mac mortgages.
The New York Times reported last week that starting June 15, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days. In addition, they must respond to initial requests for a short sale within 30 days of receiving the buyer’s submission.
This requirement will certainly speed up the short sale process and give prompter feedback to buyers. The story also reported that foreclosures are falling, while short sales are on the rise, so this could be good in the long run for the housing market.
This option in New Jersey may get a great reception from banks, since foreclosures are taking as long as two to three years to complete. Faster turnaround time can get money to the banks sooner, and properties to owners who can often better afford the monthly payment on the new mortgage loan. Homeowners toughing it out on a loan they can no longer afford will more likely be able to keep current on the payments until the closing, thus giving them the best chance of minimizing the damage to their credit.