Fannie and Freddie announced new timeline requirements for short sales. Starting June 15, 2012, servicers must:
- Acknowledge receipt of documentation within three days
- Notify borrower within five days if more documents are needed
- Respond to short sale request within 30 days of receipt of all documentation
If a mortgage insurance company or another stakeholder delays things, the short sale can take up to 60 days for approval.
If it takes more than 30 days for an approval, the servicer must give the borrower weekly status reports.
The borrower must be given an answer within 60 days of the servicer receiving a complete package of documents. We all know the answer will be “Short Sale Denied” if the servicing company has not finished ITS work within the required 30 or 60 days.
Is this going to help speed things up? I don’t think so. The problem slowing down most short sales is the servicing company CLAIMING they need additional documents. Sometimes you’ve already sent those docs once or twice or more times. Sometimes, the rules change in the middle of a short sale and new documents are required. Sometimes, the initial document processor makes a mistake telling you what documents they need, and leave out something. If documents are not exactly perfect, then that is the same as the servicer not receiving those documents.
Here is a link if you want to read Freddie’s press release on the subject. It’s only window dressing, I think. The window frame is rotted away, the windows are cracked, and Freddie/Fannie is hanging new curtains, thinking it will fix the problem. Not likely!