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Real Estate Law Blog

Changes to Fannie Mae and Freddie Mac Short Sales Impact Investors

On January 18, 2013, Fannie Mae and Freddie Mac announced changes to their servicing requirements for short sales. Please see below for some key changes that all parties involved in a short sale should be aware of. These changes apply
to all Fannie Mae and Freddie Mac short sales; with an offer and without an offer.


Title Transfer requirement change:

  • The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the
     deed.

  • After a 30 day period, and until 90 days from the date of the deed the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price.

          Note: The above restrictions will run with the land, which means that the restriction is not personal to the seller
          and will pass to the subsequent buyer upon transfer of title. 


Below is an example on how to calculate the 120%

  • Purchase Price is $100,000.00

  • 120% of the purchase price would be $100,000.00 X 1.2 = $120,000.00


Relocation Assistance:

The borrower may be entitled to an incentive payment of $3,000 from Fannie Mae/Freddie Mac to assist with relocation expenses following successful completion of a short sale unless:

     1.  The borrower is required to contribute funds or execute a promissory note.

     2.  The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other 
          government relocation assistance.

     3.  The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the 
          servicer.

          Note: If the borrower receives relocation assistance from a source other than Fannie Mae / Freddie Mac or the          
          Servicer, the difference in the relocation assistance amount up to the $3,000 incentive maximum may be provided.
          If the borrower will receive relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer
          and the amount is equal to or greater than $3,000, no relocation incentive will be provided.


It is vital to have an attorney negotiate and close your short sale transaction.  Call THE LAW OFFICES OF JEANNE M. REARDON to assist you with your short sale.  Free initial consultation.  Call us at (516) 314-8433.