Federal regulators are hoping that the new rules which are set to take effect next month will stream line the short sale process.
As of June 15 the housing agency that is responsible for the regulation of Fannie Mae and Freddie Mac will have laws in place which will require that both agencies implement a time limit on short sales. Companies will have to make a decision in 60 days. A short sale is when a lending agency agrees to accept a lesser value that the actual amount of the mortgage.
Freddie and Fannie will also need to provide a response when a request for a short has been made within 30 days after they have received a submission.
According to Peter Spino Short sales are very popular right now. Many home owners who are facing foreclosures prefer them to a foreclosure he said.
Michael McHugh the chief executive office and president of Continental Home loans has said that quicker processing of sales as result of the new laws will be beneficial to the entire housing market. It will also remove some of the risk from the purchaser. As before many would have to wait several months before a final decision was made only to be told they would not get the house they wanted.
CoreLogic a data analysis company has recently reveal that as of March 2012 short sales represented well over 14 % of existing home sales this represents a 2 % increase of 2011 when short selling stood at 12 % and 10 % back in 2010. The increase in short selling has also contributed to the number of foreclosures decreasing.
Short selling is much preferred by lenders to foreclosures as they cost less and are far more efficient when compared to foreclosures.
Many individual believe that short sales are much better for credit scores when compared to foreclosures. However this is a miss conception according to Rod Griffin who is the director of consumer and public education at one of the major credit bureaus. The impact that is has on the credit score is very small and they do remain on the foreclosure up to seven years. Foreclosures will only show up once the legal paper work has been filed and this take up to several months according to Mr. Griffin.
Vantage score was responsible for measuring the effects that short sales have on credit scores, the fact is the higher the credit rating of an individual, the more points they would lose if they did a short sale.