Short Sales Just Got Shorter

This month, Freddie Mac announced all mortgage servicers must decide on a short sale within 60 days. This rule goes into effect June 15, 2012.

A short sale occurs when a lender agrees to sell a mortgage for less than the amount owed. It is often used as an alternative to foreclosure because foreclosure can be a loss to everyone involved.

Shorter Short Sales – Stellar News

This is welcome news for struggling homeowners and real estate investors alike. Previously, lenders could take months to approve or deny a short sale.  This delay caused thousands of unnecessary foreclosures due to canceled contracts between buyer and seller.

How It Works

Here’s how the new short sale rules work:

  • Lenders have 30 days to review and respond to a short sale request.
  • If 30 days pass with no decision, the lender must give a weekly status update to the borrower.
  • Ultimately, the short sale decision must be made within 60 days.

The new rules were handed down by the Federal Housing Financing Agency (FHFA), which oversees Freddie Mac.

According to the Agency, it’s the first step towards, “develop(ing) enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.”

End of Foreclosure Glut?

Probably not, but it’s a good move for both investors and distressed sellers. This is just the beginning of a number of changes to the mortgage and foreclosure process. In addition to the new short sale rules, we’ll see more plans to improve both the mortgage lending and foreclosure process.

Do you think these changes will help your investment business? Share your thoughts in the comments below!


  1. Great! I’m just wondering if this rule will apply to all distressed mortgages or just the ones that fall under freddie / Fannie ?
    & Do all mortgages fall under either freddie or fannie?

  2. Lots of really great info here thank you so much…. keep up the amazing work.

  3. It’s about time, that they finally made a decision on heiping the borrower.




  1. Are Short Sales the Next Big Investment Market? - [...] affect investors? It creates more opportunities for wholesale and flips. Freddie Mac just made the short sale process shorter …

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