Now this is some welcoming news. The Federal Housing Finance Agency announced a new policy designed to speed up the process that banks use to handle short sales for mortgages that are backed by Fannie Mae and Freddie Mac.

The new policy will require banks to respond to a request for a short sale offer within 30 days. Banks also will be required to make a final decision on the short sale offer within 60 days. If the decision is not made within 30 days banks will be required to provide weekly status updates to borrowers regarding the pending short sale offer.

The new policy is set to roll out in stages with the first phase starting in June. With these new standards in place it should "prevent foreclosures, keep homes occupied, and help maintain stable communities,” says Edward DeMarco, the FHFA’s acting director. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

Source: Federal Housing Finance Agency 

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A Short Sale is a complex transaction in itself, but there is always one thing that is constant in a qualified Short Sale transaction.

The house must be valued at less than the homeowner owes on their mortgage debt. In other words, the home must be “underwater”.

In most cases there should be a "Hardship". The simple fact that you owe more than your house is worth may not constitute a hardship. A Short Selling bank will entertain a short sale when and only when there is a hardship that will, now or in the future, affect the borrower’s ability to pay their mortgage.

Below is a list of some acceptable "Hardships":

• Mortgage Rate Adjustments
• Loss of Employment or Reduction in Wages
• Business Failure
• Medical Hardship
• Death in the Family
• Divorce/Separation
• Military Service
• Overwhelming Debt Obligations
• Job Relocation

As always, If you have questions as to the acceptability of a hardship scenario, you should seek advice from an expert that has been trained in the short sale field.