Leaner Fannie Mae Regulations Mean Healthier California Home Prices
A streamlined approach for processing short sales and deed-in-lieu went into affect on November 1. Fannie Mae announced the new measure to help, “stabilize neighborhoods.” This may encourage homeowners looking to avoid or stop foreclosure in Los Angeles and other Southern California markets.
Providing a better resource for any Los Angeles short sale attorney, the initiative speeds up the foreclosure prevention process. The final hurdle was an agreement between Fannie Mae and the nine mortgage insurance companies that handle the GSE’s properties. A clear set of Fannie Mae requirements now allows mortgage servicers to approve any short sale or deed-in-lieu. The process will be much more efficient since individual approvals from the insurers are no longer required.
According to Ghazale Johnston of Accenture Credit Services, obtaining all the necessary approvals created the biggest drag on foreclosure prevention. “If this agreement streamlines the approval process and enables servicers to accelerate the short sale or deed-in-lieu process, it should help unclog the backlog of delinquent loans,” said Johnston, according to Housingwire.com. Each short sale attorney in Los Angeles can probably attest to this.
For a homeowner in distress, a short sale or deed-in-lieu may be a better option than a foreclosure. After all, a default will certainly have a severe impact on one’s credit score. Recovering from foreclosure is possible but a lender may be willing to take the deed of an attractive property instead.
It’s not uncommon for lenders to refuse ownership of more distressed properties. Instead, they may be willing to work with the homeowner and a Los Angeles short sale attorney, or a more local lawyer, to sell the home for less than the balance owed on the mortgage. It’s important to understand how the deficiency balance, or the amount between the sale price and the value of the mortgage, will be handled. Here again, a short sale attorney can help.
Short sales also benefit the local housing market since homes are more likely to be kept up with a short sale. There is little incentive to maintain a property for a family that is about to be evicted through a foreclosure. The ones that may lose out in all this are second lien holders. With more short sales, more of these lien holders will be forced to take the $6000 cap instead of recovering what could be a much larger debt.
Taken at face value, Fannie Mae is working to help borrowers avoid foreclosure as much as they can. Senior vice president Leslie Peeler stated that the process not only helps distressed homeowners, but the American taxpayer as well. “We are pleased that the mortgage insurance companies have stepped up to the plate with us to help more homeowners.”
According to Fannie Mae data, the GSE completed 46.226 short sales and 7,509 deed-in-lieu through the first half of 2012. In all, 142,987 loan workout solutions (or other methods to stop foreclosure in Los Angeles and around the country) were completed in that time. It remains to be seen if the rate increases over the next six months because of the new measure.
If you have fallen behind on your mortgage payments and are at risk of losing your home, call Oaktree Law today at (562) 219-2979 and our skilled foreclosure attorneys can get to work resolving your issues no matter where you live in Southern California.