Fannie Mae is testing a new way to handle short sales. In this new pilot program Fannie Mae will test a new process by which Fannie Mae pre-approves the list price. Then if a buyer make a full price offer the lender will accept the offer as long as the transaction meets standard requirements. For the purposes of the pilot, Fannie Mae has validated a specific list of properties that have already met the following criteria:
The property must be secured by a Fannie Mae mortgage.
The mortgage must be serviced by Countrywide Home Loans.
The property must be a potential short-sale (i.e., the list price is less than the unpaid balance on the mortgage).
There are only about 400 homes in Orlando and Phoenix that have been selected for the pilot. That may be only a small handful of the "short sale" properties that we need to clear off the market but its a start. If this program works it could clear the path for other lenders to step up and do the same.
As it is, the typical time from offer to closing on a "short sale" property is four to six months. Most buyers don't or can't wait this long so they don't even consider "short sale" properties. These properties then just sit on the market and clog the system then eventually become bank owned (REO) properties and are priced below market value. Once sold, these properties make their mark on the value of the surrounding homes in the area. In order to preserve home prices we need to get these properties off the market as soon as possible and this program, if successful, could very well do that.
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