first tuesday insight
137 readers participated in our recent poll on Frannie’s Standard Short Sale. 63% (86 voters) believed the new Standard Short Sale will increase the number of short sales in California.
Despite the majority voter opinion, commenters were skeptical about the benefits of short sales. Some argued a long, rent-free foreclosure and strategic default made more sense for negative-equity homeowners. Others said the new guidelines won’t help since lenders still call the shots on short sales.
And it’s true that Frannie’s new program is less than ideal. Homeowners electing to short sell will still be hit with the “not paid as agreed” credit score reduction. But at least Frannie is making it easier to climb out of a black hole asset. Every neighborhood has a negative equity homeowner; easier guidelines means more clients for you. Just make sure you counsel them about the credit score “cost” of a short sale.
We’ll see if the lenders play. Will this plan pan out – or just get panned?
To read more about Frannie’s new Standard Short Sale program, see September 2012 first tuesday article, No sugar from FICO for Frannie’s non-delinquent short sellers.