Regulators Tell GSEs to Assist Military with Short Sales

by devteam June 22nd, 2012 | Share

Both Freddie Mac and Fannie Mae will be offering additionalrnconsideration to military personnel who may be facing problems with theirrnmortgage due to service related orders. rnThe two GSEs were directed to addressrnmortgage servicer practices that pose risks to home owning service members andrnto ensure compliance with applicable consumer laws and regulations. The “guidance” came from regulators thernFederal Reserve, Consumer Financial Protection Bureau, Federal DepositrnInsurance Corporation and other regulators. </p

The guidance pertains to risks faced by homeownersrnwho have received Permanent Change of Station (PCS) orders, that is have beenrnordered by the military to relocate to a new duty station or base.  Such orders are received by about one-thirdrnof active-duty service members each year.</p

PCS orders are non-negotiable and carry short, strictrntimelines.  Homeowners with such orders,rnhowever, are still obligated to honor their financial obligations includingrntheir mortgages.  In the currentrnenvironment, with so many homes underwater, these service members may be unablernto sell their homes and obtain sufficient funds to pay off the mortgage debtrnand may have to continue mortgage payments while making rent or other housingrnpayments in their new location.</p

Under the new guidelines, receipt of a PCS will berntreated as a hardship for the purpose of qualifying for a short-sale even if thernhomeowner is current on the existing mortgage. rnMilitary with PCS who complete a short sale will be exempt fromrndeficiency judgments from Fannie Mae and Freddie Mac and relieved of anyrnrequest or requirement to contribute cash to the sales proceeds or to sign arnpromissory note for any outstanding balance as long as the property wasrnpurchased on or before June 30, 2012.</p

In addition to holding PCS order, the homeowner mustrnhave a mortgage owned or guaranteed by Fannie Mae or Freddie Mac to be eligiblernfor the program.  The status of thernmortgage can be current or delinquent.  FreddiernMac and Fannie Mae were instructed by regulators last year to treat PCS ordersrnas a hardship for purposes of modifications and forbearance. </p

PaulrnMullings, Freddie Mac’s Interim Head of Single Family Business andrnInformation Technology said, “FreddiernMac is proud to support this important new effort to help servicemen and womenrnwhen national duty requires them to sell their homes in an uncertainrnmarket.  We look forward to working with our servicers on this new shortrnsale policy.  Together we can help ease the challenge of relocation forrnmilitary families when Permanent Change of Station orders arernreceived.”  </p

The Federal Housing Finance Agencyrnsaid it would provide final guidance by September 30 and the short-sale reformsrnwould be effective 60 days later.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...