Fannie Mae has been given the authority to proceed with a short sale or complete a deed in lieu of foreclosure by five mortgage insurers, without needing to secure their approval, it has been revealed.
Typically, it has always been the case that the mortgage servicer was contacted beforehand in order to give the OK for a short sale on properties secured with guaranteed loans, reports Housing Wire.
Now however, with one less bit of red tape to get by, it’s hoped that Fannie Mae mortgage servicers will be able to step up the approval of short sales.
The latest mortgage insurer to give Fannie Mae the authority to proceed without waiting is the PMI Group, which only recently filed for bankruptcy last year. PMI Group joins Genworth, Republic Mortgage Insurance Co., MGIC and Radian Guaranty in already granting authority to Fannie Mae.
Even so, Fannie Mae has warned its mortgage servicers that they must be certain there is no conflict between a short sale and the existing mortgage insurance on the property, prior to approval.
A spokesperson for Fannie Mae told Housing Wire that these new agreements were part of a wider plan to increase short sale completion rates and also boost the speed of the process. As part of these efforts, Fannie Mae has also distributed short sale processing software to numerous MLSs across the US.
Short sales, which are often seen as a better alternative to foreclosure, till lag behind REO sales in numbers. Over the last three months, Fannie Mae and Freddie Mac combined completed approximately 28,000 short sales, down from the 32,000 completed in the third quarter of 2011.