Free Specialist Consultation!

Short Sale Guide

Short Sale News

Connect With Us

Freddie Mac Announces Short Sale Program

Mortgage servicer Freddie Mac is following sister agency Fannie Mae in releasing its own version of the Home Affordable Foreclosure Alternative (HAFA), a government program designed to help homeowners pursue short sales to avoid foreclosure.

The program is set to take effect on August 1, at the same time as the Fannie Mae initiative, although Freddie-backed lenders can implement it earlier.

Under the Freddie Mac version, servicers must consider borrowers for loan modification under the Home Affordable Modification Program (HAMP), as well as other workout options, before granting them a short sale. This way, the HAFA short sale would remain a last resort after all home retention options have failed.

If the borrower qualifies and is willing to do the short sale, the property must be sold within the marketing period set by HAFA. Otherwise, the lender may offer the homeowner a deed-in-lieu of foreclosure, provided it is authorized by Freddie Mac.

Servicers will receive $2,200 from Freddie Mac for every HAFA short sale effected, and $1,500 for every deed-in-lieu. Borrowers will also be given a $3,000 incentive to help them with relocation following the short sale.

For homes with subordinate lien holders, the program allows each holder to be paid up to 6% of the balance as payment of the subordinate liens and other debts, until the aggregate cap of $6,000 is reached.

Freddie Mac will also accept promissory notes or cash contributions from borrowers pursuing the short sale. In addition, other lien holders must agree to write off all the liens without contributions, so that the borrower can qualify for the program.