The short sale seems like a better alternative than foreclosure, in theory. A buyer keeps a property in good shape; a seller avoids a stigma; a bank gets something more than it probably would have. But in the end, most such deals fall apart, because of red tape or the refusal of mortgage guarantors to accept the price agreed to by buyer and seller. At the end of last year, Fannie Mae tried an end-run around those obstacles, introducing a 90-day trial of pre-approved price for short sales in Orlando, FL, and Phoenix, AZ.
Kevin Brungardt, vp of service management at Fannie, says the “goal is to make the short sales program as fast and easy as possible for homeowners in financial distress. Foreclosure is the worst of all outcomes, in our opinion.” Depending on the success of the pilot program, Fannie may expand the program; feedback is positive to date, sources say.
Meanwhile, both Fannie and Freddie Mac have extended the suspension of foreclosure sales and evictions involving occupied single family and 2-4 unit properties through January 31. That breather only applies to mortgages owned by Fannie or Freddie.