GSEs, Mortgage Insurers Delegate Short Sale Authority to Servicers to Ease Process

Agreements were announced on Wednesday withrnnine private insurance carriers that will make foreclosure alternatives muchrnquicker and easier for some Freddie Mac and Fannie Mae (the GSEs) borrowers tornobtain.  Servicers will no longer have tornseek approval of private mortgage insurance (PMI) companies when borrowers withrnmortgages owned or guaranteed by either GSE and carrying PMI seek a short salernor permission to grant a deed in lieu of foreclosure.   </p

The agreements, which become effectivernon November 1, allow the GSEs to approve short sales and deeds in lieu on therninsurers’ behalf.  The GSEs are, in turn,rndelegating these authorities to their servicers.  The delegations will eliminate the separate reviewrnrequired by the mortgage insurers.   Freddie Mac, in announcing the agreements saidrnthat this should reduce the potential costs, delays, and uncertainty involvedrnin the transactions, enabling more distressed borrowers to avoid foreclosure.</p

Ninerncompanies inked the agreements with the GSEs.  They are CMGrnMortgage Insurance Company, Essent Guaranty, Inc., Genworth Mortgage InsurancernCorporation, Mortgage Guaranty Insurance Corporation, PMI Mortgage InsurancernCompany, Radian Guaranty, Inc., Republic Mortgage Insurance Company, TriadrnGuaranty Insurance Corporation, and United Guaranty Corporation. </p

Fannie Mae said it previously hadrnindividual delegation agreements with the majority of its top PMIrncounterparties but the standard agreement with all nine insurers would make thernapproval process more consistent and efficient for servicers and borrowers.</p

Freddie Mac said the agreements willrnbuild on recent Freddie Mac efforts to encourage more short sales.  OnrnNovember 1, Freddie Mac’s new Standard Short Sale will also go into effect,rnstreamlining the short sale approval process and broadening the ability ofrnservicers to help distressed borrowers. </p

Tracy Mooney, Senior Vice President,rnServicing and REO at Freddie Mac said, “We applaud the nation’s mortgagerninsurers for committing to work with us and our servicers to help morernborrowers obtain short sales and other foreclosure alternatives.  Byrnpaving the way for more borrowers to avoid foreclosure, today’s announcementrnwill support the housing recovery and help reduce taxpayer losses.”</p

“Short sales and deeds-in-lieu are important tools to prevent foreclosuresrnand help struggling borrowers,” said Leslie Peeler, senior vice president,rnNational Servicing Organization, Fannie Mae. “These delegation agreementsrncreate an even more streamlined process that will ultimately help more familiesrnavoid the costly effects of foreclosure and benefit taxpayers.  We arernpleased that the mortgage insurance companies have stepped up to the plate withrnus to help more homeowners.”

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