The Federal Home Loan Mortgage Corporation, more often known by its friendly nickname of Freddie Mac, recently hosted two events in South Florida for local real estate professionals. In this area, which includes Miami Springs and Davie, where the events were held, has approximately 40,000 homes that are lender-owned, and many more that are in some part of the foreclosure process.
The Freddie Mac events provided estate professionals with detailed information about the requirements for short sales. Freddie Mac, as well as Fannie Mae (the Federal National Mortgage Association), avidly promotes short sales over foreclosures. The events were intended to help real estate professionals who may not be as familiar with the short sale procedure gain some understanding of the intricacies of the process, in order to better serve homeowners.
The events discussed the various parties that are involved in short sales, and how agents interact with each of them. They described the short sale process, which is regulated.
They reviewed the required documentation, described what to cover in a pre-listing interview with the seller. When the mortgage is held by Freddie Mac, there are some additional benefits that can be gained. These include an enhanced payoff program, more willingness to look at all deals being offered, and an increased delegation to the seller’s server.
In Florida, the foreclosure process can take quite a long time, and often leaves homeowners with deficiency judgments, lawsuits that result from the unpaid mortgage debt. Short sales are a more appealing option because they protect against deficiency judgments. They are not necessarily less complex than a foreclosure, but they do benefit all the involved parties better.
The seller, and the neighborhood in which the home is located, avoid the stigma associated with foreclosure, which can lead to a snowball effect on the market. The mortgage insurance company is able to minimize its losses. The investor avoids the additional expense and effort of an REO. The real estate agent closes a sale, earning a commission and standing in the neighborhood.
Freddie Mac owns about 60,000 properties across the United States at the present time. They are strongly committed to selling to homeowners, rather than investors or those who purchase homes with the intention of flipping them. Currently, about 70 percent of the homes sold by Freddie Mac go to homeowners.
As many as 50% of mortgages go into foreclosure with no personal contact with the borrower. Freddie Mac is actively engaged in educating homeowners, agents, and lenders with the goal of reducing that number to zero. A study found that many homeowners are under informed about the options that are available to them when they are having trouble meeting mortgage payments.
Freddie Mac also hosts foreclosure prevention workshops for homeowners. A full list of dates and locations is available on the Freddie Mac website. These workshops cover all the options for staying in the home, including refinancing, forbearance, reinstatement, repayment, and modifications. They also cover the options for exiting the home gracefully, short sales and deed-in-lieu.
