FHFA: Lenders have 30 days to respond to short sale requests

Lender taking too long to process a short-sale request? Guess what? The Federal Housing Finance Agency has released a new set of “timelines” (read: rules) for mortgage servicers.

Here’s the important part:

The new, aligned timelines include the requirement that mortgage servicers review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer.

So if a bank is servicing a loan owned by Fannie or Freddie (and that’s most of them), it has 30 days to respond to a short sale request.

If it can’t respond within 30 days — say, it needs time for an appraisal or has to get a mortgage insurer’s approval — it can take up to 60 days, but it must send provide the owner weekly status updates.

(What isn’t clear, though, is how long a lender can stall by requesting information from the homeowner. The rule requires a response “no later than 30 days following receipt of a complete BRP [Borrower Response Package].” Does that mean a bank can say “The BRP isn’t complete. We need you to provide form XYZ123″? I suspect that question will be answered fairly soon.)

NAR president Moe Veissi praised the guidelines: “Realtors greatly appreciate FHFA’s efforts in establishing a timeframe for responding to sellers and potential buyer offers to help streamline the short sales process.”

And the Wall Street Journal even asked, “Is Our Long National Short-Sale Nightmare Finally Coming to an End?”

Click here to read the FHFA release yourself (PDF).

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