Sliver of Silver for Distressed Homeowners

There may be some good news on the horizon for distressed homeowners. If your loan is owned by Fannie Mae or Freddie Mac, you may find a sliver of silver in your dark cloud.

For sellers who find they are in “upside-down” mortgages (the seller owes more than the current market value of the home), there may be some help coming your way.

Associated Press (4/11/2008) reports that Fannie Mae and Freddie Mac are going to allow more distressed homeowners to sell their homes for less than they currently owe on their loans. Fannie Mae is hoping that by being cooperative with the short sale of a property they will be able to stem the tide of future foreclosures.

Fannie Mae is encouraging the companies that service their loans to be more cooperative with homeowners who are in default and owe more than they can sell for. They are also encouraging real estate agents to consider short sale properties as a viable option for their buyers. In the past, short sales have been difficult to get approved and the process for approval could be a very bumpy road for the distressed seller and potential buyer; many real estate agents, buyers and sellers would not even attempt a short sale transaction because of the difficulties. Fannie Mae’s announcement should make the approvals easier to get and the road much smoother which, in turn, makes it a viable option for the home seller and the home buyer.

A short sale may not be the answer the delinquent homeowner is looking for since it will not allow them to keep their home; but it will help with future credit issues as the loan will be reported as “settled” on credit reports, without the dreaded “foreclosure” on their credit report. This could be especially helpful to those whose only credit issue is their mortgage payment.

If your house payments are currently in a default status, be sure to contact your loan servicer (the company you make the payments to) to see if you can qualify for any of their “work-out” options. If you do not qualify for a “work-out” program, talk to the person you are working with about the possibility of a short sale.

If you are a buyer or seller in the Reno-Tahoe area, contact me with any questions you may have regarding your real estate needs or concerns.