Fannie Mae Brings Some Ray of Hope for the Home Owners

Fannie Mae, one of the major government aided enterprise of America has launched a new program to prevent further foreclosures in the state. This program allows short sales of homes, in which the mortgage companies allow the homeowners to sell off their properties for a lesser value than existing loans.

The number of mortgage defaulters has increased over a period of time. There was time when troubled borrowers wanted a way out to sell their homes to potential buyers. So, the real estate agents came up with short sales scheme in the market. The real estate agents convinced the borrowers that banks and mortgage companies would go with scheme because they had nothing to lose and prevent foreclosures.

The short sale scheme did not work out because the servicing firms, lenders and mortgage guarantors rejected the sales price agreed by the buyer and the seller. The other reason was that it took too long for the mortgage companies to approve such transactions and the deal soon closed off.

Most of the short sales projects have earned a bad name for themselves as the portion of the overall mortgage market has gone down. According to a survey conducted by Campbell during the month of November last year the average wait time to get an answer from the lenders was too long.

Now Fannie Mae wants to reduce the delay and bring up the sales by agreeing on the price of the home and incur for the losses made. Fannie is willing to take up the sale even before a buyer has found. For this, the two pilot projects have been launched in Phoenix and Orlando. These projects have started in December and will last for three months.

The test program for the time being is limited to properties secured by Fannie Mae mortgage and serviced by Countrywide Financial Corp., a subsidiary of Bank of America Corp. Only the homes already listed less than the unpaid balance on the mortgage are eligible for the pilot project. Till now, only 400 homes have qualified for the projects in two months.

While the mortgage holders are still taking in the loss for the short sale. The officials at Fannie Mae say that if the pilot program is successful, it has plans to expand the project to other lenders and regions. The goal of Fannie Mae is to make the short-sale process much faster for homeowners who are in financial distress.

In the present recession period, both Phoenix and Orlando have been hit hard by foreclosures in particular. The home prices fell in the Phoenix region by 33% and some 29% of the state borrowers had negative equity in August.

The economy of America has been hit hard by the housing markets. Most of the borrowers owe more than the sale price of their homes. So, Fannie’s effort may bring some ray of hope for house owners.