Mortgage Insurance Approval No Longer Required for Fannie & Freddie Short Sales!!

Looks like its official!! BOTH Fannie Mae AND Freddie Mac no longer require mortgage insurance approval for many of the top Mortgage Insurance companies! This will shave two or three weeks off the short sale process on average!! AWESOME NEWS!  Here are the companies that Fannie & Freddie now have delegated agreements with - CMG Mortgage 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!!

Official Freddie Mac Bulletin:

Wednesday, October 31, 2012 10:16 AM
Single-Family Update

Categories in this update:
Originate & UnderwriteSell & DeliverServicing

October 31, 2012

Updates in today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-23 provide you with precise requirements for your loss mitigation activities. All requirements are effective immediately unless specified otherwise. We are:

  • Announcing delegation agreements with several mortgage insurance (MI) companies. On November 1, 2012, you can begin approving short sales and deeds in lieu of foreclosure that are completed in accordance with the Guide without obtaining pre-approval from the participating MI companies. With the new delegation agreement, you will experience greater efficiencies in evaluating borrowers for foreclosure alternatives.
  • Specifying when you must provide documents for MI claims. You must provide all information or documentation to the MI company no later than 60 days after the foreclosure sale, short sale, or deed in lieu of foreclosure. You may be required to submit the appropriate documents in less than 60 days if specified by Freddie Mac or the MI’s master policy.
  • Revising the imminent default documentation requirements. The Home Affordable Modification program (HAMP) and Freddie Mac Standard Modification requirements have been revised to further streamline borrower documentation requirements. You may now rely on the documentation borrowers provide in their Borrower Response Package as required in Guide Section 65.17, Verifying a Borrower’s Hardship, when evaluating borrowers for imminent default.
  • Providing you with the option to use the Automated Clearing House (ACH). You now have the option to utilize ACH to receive eligible expense reimbursements and incentive payments and benefit from faster processing of payments. Refer to new Guide Exhibit 98, Expense Reimbursement/Incentive Authorization Agreement for ACH Credits, for instructions and required documentation.
  • Reimbursing you for interest. In cases where a taxing authority considers interest as a penalty or part of a penalty, Freddie Mac will reimburse you on the first instance only. This applies to borrowers who have non-escrowed mortgages and did not pay their taxes.
  • Updating charge-off recommendation requirements. These updates further support community stabilization by reducing the number of charge-offs. Conventional mortgages that have unpaid principal balances (UPB) of $5,000 or less must meet additional requirements to qualify for charge-off consideration. In addition, land value may no longer be considered when evaluating condemned properties for a charge-off.
  • Requiring you to obtain Freddie Mac’s prior approval to refer a borrower to foreclosure in certain instances. If you believe the foreclosure may pose a risk of property ownership to Freddie Mac or may not be in Freddie Mac’s best interest when you conduct the pre-referral account review, you must obtain Freddie Mac’s approval to refer a mortgage to foreclosure.

Also, refer to today’s Guide Bulletin for information on new diversity and inclusion provisions, where to find Exclusionary List requirements for servicing, and reminders on offshore accounts, the retirement of balloon/reset mortgages, and ARM rate cap revisions.

More Information

 


Directly From Fannie Mae's Website:

Fannie Mae Reaches Short Sale and Deed-in-Lieu Delegation Agreements with Mortgage Insurers

WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that it has reached delegation agreements with all of its mortgage insurer counterparties so that servicers can complete short sales and deeds-in-lieu of foreclosure without seeking approval from the insurer.  These agreements will further streamline the foreclosure prevention process and allow short sales and deeds-in-lieu to be completed more efficiently.

"Short sales and deeds-in-lieu are important tools to prevent foreclosures and help struggling borrowers," said Leslie Peeler, senior vice president, National Servicing Organization, 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."

Previously, Fannie Mae had individual delegation agreements with the majority of its top mortgage insurer counterparties.  Now, a standard delegation agreement has been reached with all nine mortgage insurers, making the approval process more consistent and efficient for servicers and borrowers.  The new delegation agreements allow servicers to approve any short sale or deed-in-lieu that meets Fannie Mae’s requirements without individual mortgage insurance approval.

These agreements are an important achievement in Fannie Mae’s efforts to stabilize neighborhoods and have been established with CMG Mortgage 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.  All delegation agreements will be effective as of November 1, 2012.

Borrowers can visit http://www.knowyouroptions.com/ for foreclosure prevention information and resources, including how to contact Fannie Mae's twelve Mortgage Help Centers across the country.  Through the first six months of 2012, Fannie Mae completed 142,987 loan workout solutions, including 46,226 short sales and 7,509 deeds-in-lieu of foreclosure.  Earlier this year, Fannie Mae announced new short sale guidelines and new short sale timelines.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

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Good info.  Thanks for share Mike!

 

I am hoping this will help.  I have had 5 fnma short sales get delined since april because they are continueing to bring in value 10-20% higher then the bpo/appraisal.  I am in the process of consulting legal counsel.  This appears to be only a FNMA issue and should be explored further.

Looks like its official!! BOTH Fannie Mae AND Freddie Mac no longer require mortgage insurance approval for many of the top Mortgage Insurance companies! This will shave two or three weeks off the short sale process on average!! AWESOME NEWS!  Here are the companies that Fannie & Freddie now have delegated agreements with - CMG Mortgage 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!!

That's good news Mike. 

Couple of other people on this post have asked about FM and the inflated BPO/sales values they want on current FM Short Sale properties.  Not sure if this is the right place to disucss this in more detail but can you shed any light on this subject? 

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