Homeowner Eligibility

Understanding Homeowner Eligibility

The homeowner's mortgage servicer evaluates a homeowner's situation and determines if the homeowner qualifies for a Fannie Mae short sale. If the homeowner is at risk of imminent default, they may qualify for a short sale even if not delinquent. The mortgage servicer will determine eligibility and lay out the necessary steps for the homeowner so it is critical to talk to your client's servicer early in the process.

• To prepare to talk to the mortgage servicer, the first step in the process is to determine whether Fannie Mae owns your client's loan. Use Fannie Mae's Loan Lookup Tool to determine if your client's mortgage is owned by Fannie Mae. Homeowner consent is required if the agent is using the loan lookup tool on the homeowner's behalf.

If Fannie Mae owns your client's loan, your client must typically meet one of the following conditions to be eligible for a Fannie Mae short sale:

• 90+ days delinquent and has a FICO score less than 620. Potentially no borrower financial documentation, hardship or contribution required, in this case. Or, be 18+ months past due.
• A demonstrated hardship that can be documented and detailed in Borrower Response Package.

The listing agent and homeowner should work together to ensure the following checklist is completed during the eligibility determination process:

• Confirm that Fannie Mae owns the loan using the Loan Lookup Tool. Homeowner consent is required if the agent is using the loan lookup tool on the homeowner's behalf.
• Obtain a signed Fannie Mae's Homeowner Authorization Form from the homeowner (note, the servicer may require their own version of an authorization form if a Borrower Response Package is not required).
• Contact the mortgage servicer to discuss the client's eligibility for a short sale.
• Determine how much your client owes and estimate net equity.
• Obtain a preliminary title report to show what types of liens are on the property that need to be cleared prior to closing. (Fannie Mae will allow up to $6,000 to resolve outstanding subordinate liens).
• Confirm with your client's mortgage servicer that there is enough time before foreclosure to complete a short sale.
• Confirm your client is willing to provide necessary documents and maintain the property for showings during the eligibility determination process.

There are other considerations that you as the client's agent must consider:

• Homeowners may be eligible for relocation assistance for $7,500 from Fannie Mae.
• When applicable evaluations will be made on a case by case basis to determine if the homeowner has sufficient income or assets to make a cash contribution or sign a promissory note for the short sale.
• After taking into account any required contribution. Fannie Mae will waive the right to pursue deficiency judgments upon successful completion of the short sale closing.
• Service members with Permanent Change of Station Orders (PCSO) will not be asked for a contribution towards the shortage for properties purchased on or before June 30, 2012. Additional consideration may also be given to service members who are moving or have moved from their primary residence.

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