Fannie Mae and Freddie Mac servicers will be able to skip a step when attempting to get a short sale or deed-in-lieu of foreclosure approved.
On Wednesday, the GSEs announced standard delegation agreements were reached with nine mortgage insurers to allow servicers to approve of short sales and deeds-in-lieu without a separate review process with the mortgage insurer. The agreement takes effect November 1 and should speed up the process for the foreclosure alternatives. The short sale or deed-in-lieu still has to meet the GSEs’ requirements, but servicers don’t have to wait for mortgage insurers to offer their stamp of approval.
“Short sales and deeds-in-lieu are important tools to prevent foreclosures and help struggling borrowers,” said Leslie Peeler,SVP of national servicing organization at Fannie Mae. “These delegation agreements create an even more streamlined process that will ultimately help more families avoid the costly effects of foreclosure and benefit taxpayers. We are pleased that the mortgage insurance companies have stepped up to the plate with us to help more homeowners.”
Tracy Mooney, SVP of servicing and REO at Freddie Mac, said, “We applaud the nation’s mortgage insurers for committing to work with us and our servicers to help more borrowers obtain short sales and other foreclosure alternatives.”
The mortgage insurers that signed onto the agreement are CMGMortgage Insurance Company; Essent Guaranty, Inc.; Genworth Mortgage Insurance Corporation; Mortgage Guaranty Insurance Corporation; PMI Mortgage Insurance Co.; Radian Guaranty Inc.; Republic Mortgage Insurance Company; Triad Guaranty Insurance Corporation, and United Guaranty Mortgage Insurance Company.
The GSEs require mortgage insurance for borrowers who make a downpayment that is less than 20 percent of the property value when taking out a loan.
The announcement adds to Fannie Mae and Freddie Mac’s new standards for short sales, which also take effect November 1. The new guidelines for short sales were adopted to streamline the short sale approval process.
By: Esther Cho, DSNews