If your home is underwater, meaning that you owe more money than your home is actually worth, then you may get a break come November 1 of this year.
The Federal Housing Finance Authority (FHFA) has recently announced that homeowners paying off mortgages to Fannie Mae and/or Freddie Mac can put their homes up for sale with less hassle from the lenders and services holding their mortgage debts.1
A short sale is where you put your home up for sale at a significantly lower price tag. This would be a great way to unload your mortgage debt if you are going through a rough time, which is nothing new for many families hit hard by the recession of 2008.
Current FHFA rules means that you can only put your home up for a short sale if you are delinquent on your payments. This means that your credit score will have to take a hefty penalty before you can sell your home for its market value, not to mention the fees and penalties you’ll have to pay to the mortgagers.
You also have to go through Fannie Mae and Freddie Mac to proceed with a short sale – a procedure that is very time and energy-consuming.
The new rules to be implemented on November 1 will mean that those owing mortgage loans guaranteed by Fannie Mae and Freddie Mac can put their homes up for a short sale with less of a hassle. As long as your mortgage is underwater and you can provide documented proof of hardship (i.e. death of a borrower, illness, disability etc.), then you and your mortgage provider can go straight to a short sale without having to go through a lot of federal red tape.
This is a big thing for troubled homeowner moms that don’t want to reach the point where they have to default on their loans. You can sell your home much faster and possibly avoid a massive hit to your credit score because of a default.