Investment and Vacation Real Estate - Orlando, Florida

New Fannie Mae Program - Orlando Short Sales as Alternative to Foreclosures

Fannie Mae is testing a new program to stave off foreclosures by preapproving "short sales" of homes, in which mortgage companies allow homeowners to sell houses for less than the value of existing loans, forgiving the difference.

As the number of homeowners in default on their mortgages began to rise several years ago, real-estate agents started touting short sales as a way for troubled borrowers to sell their homes quickly to potential buyers looking for bargains. Real-estate agents reasoned that banks and mortgage companies would go along with short sales, because they tended to lose less money in the transactions than if a home fell into foreclosure.

Fannie Mae wants to reduce that delay and spur sales by agreeing on a price for a home -- and the loss Fannie is willing to take on the sale -- even before a buyer has been found.

Two pilot projects, in Phoenix and Orlando, Fla., began at the end of December and will last for three months. The test run is limited to properties secured by a Fannie Mae mortgage and serviced by Countrywide Financial Corp., a subsidiary of Bank of America Corp. Only homes already listed at less than the unpaid balance on the mortgage are eligible for the pilot. So far, about 400 homes have qualified for preapproval between the two markets. complete story

Source: Wall Street Journal - Nick Timiraos

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