DC and Shortening the Short Sale

''Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.''
-Groucho Marx

I would venture to guess that many know of my affinity for politics. In what other system can one apply the passion I have for the mortgage industry, the power to be a real world Monday morning quarterback in support of your "team" and most importantly, be inundated with an endless amount of humor put forth each day? When these factors are combined, it makes my annual "lobbying" trip such a highlight that I am riled for months to come.

When home from the District "Bubble," I always felt as if I have been given a secret pass to view images of our industry's future, like Dorothy after she looked into the Wicked Witch of the West's crystal ball. Similarly, upon my return to "Kansas" to report where I have been I am often greeted with Auntie Em's cynicism. The assurance from many is that what I have seen was just a bad dream.

Unfortunately, a dream it is not. Without industry leaders dedicated to the education of the men "behind the curtain," we would be ruled by those whose main purpose is to be re-elected. My husband and I led a team of 16 (our biggest group ever) to meet with our Arizona delegates on Capitol Hill last week. The forced smiles and unrepentant glad-handing that accompanied most election seasons was in full bloom and we were greeted again with "Why won't the banks lend? There are so many programs and incentives offered from the government, why are things not fixed?"

Oh, if I had the great powers of OZ, I would sit them in a chair, tie their hands behind their backs and duct-tape their mouths shut so we could force them to listen, not speak, to understand the complications of our market when the government and politicos try to "fix" things. Instead, our group championed the message to restore certainty in real estate finance and to avoid the raid of the real estate "piggy-bank."

Investment does not like uncertainty. With everything the government has done to "help", it has created more volatility with the private capital markets as they must weigh the political and regulatory risk that they cannot control into their investment strategy. We watch the global economy to see its effect on our markets, just like the world investment communities watch us as Dodd-Frank created untold regulatory authority without oversight. Our group explained that although the market has seen the highest quality of loans made in the previous few years, additional regulations that have no merit to "quality" such as QRM and QM requirements as well as repurchase requests that lenders have received from Fannie Mae and Freddie Mac years after they are originated, often on PERFORMING loans, the lenders are overly fearful of the origination of anything but a perfect loan.

Finally, we addressed the constant double-speak of politicians observed over the last few months. With the budget in a dismal mess, our elected officials have robbed Peter to pay for Paul. Only this time, Peter was the housing market...the same housing market that is intended to play a major role in the financial recovery. The threat of the loss of the mortgage interest deduction for homeownership is detrimental to this recovery and long-term economic growth. But nowhere is the contradiction more evident than the "tax imposed on homeownership" known as the Guarantee Fee Increase that required the GSE's (Fannie and Freddie) sustainability for the next 10 years for a short term fix of a 2 month payroll tax extension. We just shook our heads over that one.

As is the case every year, I am reminded of the real-time exhilaration and fervor that comes from the view of our future unveiled in front of us. Months and sometimes years before the news hits Main Street, we are able to see history made. Last year, it was the release of the suggested QRM requirements and this year it is all about a national servicing standard. Landmark revelations were made about these standards that will impact the foreclosure and foreclosure alternative market as well as the long anticipated release of the federal short-sale requirements and foreclosure speed.

Washington DC, to a passionate political junkie like me, remains to be an enigma. Its bright lights, the conundrum of good versus evil and its dramatic history always seems to lure me in, like an addict in need of a "fix". However, outside of claws of the District, I once again found myself saying "there's no place like home."

I hope you have a great week and please let me know if I can be of assistance to you or your clients.
Amy

Guidance Provided by Fannie Mae to Shorten Preforeclosure Time Lines
Shorten the Short Sale!

While I was in Washington DC, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to develop enhanced and coordinated strategies to facilitate short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure. Today, Fannie Mae introduced its policies to expedite this process.

Per FNMA's announcement, servicers must follow the policies for all conventional mortgage loans held in Fannie Mae's portfolio, those securitized into Fannie Mae MBS pools, and those originally sold as a part of an MBS pool. These policies require Fannie Mae to establish maximum required response times for short sale offers submitted, require servicers to provide borrowers with status updates during this evaluation process, and allow servicers to respond to short sale offers without the requirement to evaluate a HAMP modification.

In March, Fannie also announced that in an effort to maintain a streamlined and efficient process, servicers must receive a complete "Borrower Response Package" to evaluate the borrower for foreclosure prevention alternatives. Fannie warns that the servicer should not request other documentation from the borrower, except in specific limited situations. This package consists of:

• A completed Uniform Borrower Assistance Form (Form 710),
• Income documentation as outlined in Form 710 based on income type,
• Hardship documentation as outlined in Form 710 based on hardship type, and
• A Short Form Request for Individual Tax Return Transcript (IRS Form 4506T-EZ) or a Request for Transcript of Tax Return (IRS Form 4506-T) signed by the borrower.

Additionally, Fannie Mae is reminded servicers that federal income tax returns must not be requested from the borrower unless the borrower is self-employed or the borrower has rental income, as outlined in Form 710.

Fannie now states that when a servicer receives a "Borrower Response Package" it must adhere to the following response timelines.

• If the servicer is unable to fully evaluate the borrower for a Fannie Mae HAFA short sale within 30 calendar days of receipt of a complete Borrower Response Package, the servicer must notify the borrower that the request is under review.
• Each week, the servicer must provide the borrower a status update indicating the reason(s) why the Evaluation Notice is pending. Status updates may verbal or in writing and must be documented.
• The servicer must send the Evaluation Notice no later than 60 days after receipt of the complete Borrower Response Package.
• If a revised offer is received in response to a counteroffer, the servicer must provide a response within 10 business days.
• If the offer does not meet or exceed the Minimum Acceptable Net Proceeds (MANP), the servicer must provide a counteroffer with the denial. The MANP must not be disclosed to interested parties to the transaction.
• The servicer must request a response to the counteroffer within five business days.
• If the revised offer does not meet the MANP but merits further consideration, the servicer must submit a request to Fannie Mae for review and decision within 10 business days after receipt.

But what happens if the servicer does not comply? Fannie Mae may pursue any of its available remedies which include, repurchase, "make whole," or indemnification. You can read more about the specifics to these changes HERE. To see exactly what is required in the Borrower Response Package CLICK HERE.

Ha Ha
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The doctor replies, "Sorry, I don't follow you ..."