Short Sales 101

Understanding Short Sales

Fannie Mae appreciates the critical role you, as the listing agent, play in helping homeowners who are considering a short sale — it is not an easy decision for homeowners to make, but if they are facing foreclosure or can no longer afford their home it becomes an option to investigate. You play an important role in helping homeowners navigate the process and the information contained in the documents will help you assist the homeowner as they consider whether to pursue a short sale.

To begin the process, you must obtain a homeowner's permission to represent them as the listing agent by having them sign the Fannie Mae Homeowner Authorization Form.

Step 1: Determine Homeowner Eligibility

The first step to pursuing a short sale is for the homeowner to determine if he or she is eligible. You might have a client who wants to pursue a short sale, but who hasn't taken this first critical step. If your client has not investigated their eligibility, use Fannie Mae's Loan Lookup tool to determine if Fannie Mae is the first lien holder on your client's property. If Fannie Mae is the first lien holder, you should review their eligibility status and contact their mortgage servicer to confirm their eligibility and what is required to pursue a short sale.

Step 2: Request List Price Guidance

Once you have confirmed your client's eligibility for a short sale, agents can use the HomePath Short Sales Portal to submit a list price guidance request.

After Fannie Mae receives your list price guidance request through its Short Sales Portal, we will take the necessary steps to provide you with a recommended list price after a thorough valuation of the property has been completed.

Once you receive the recommendation, list the property as "Active" in your local MLS and market the property ensuring maximum exposure to obtain the highest and best contract offers. After you have listed the property, the process of showing the home and evaluating offers with your client is similar to a normal real estate sales transaction.

Step 3: Submit a Contract

If an offer has been received and your client's mortgage is owned by Fannie Mae, you can submit the contract directly to Fannie Mae through the HomePath Short Sales Portal. The offer would also need to be submitted to the mortgage servicer to conduct an initial review.  Contact the mortgage servicer for guidance.

As part of this process, all parties involved will be required to sign the Fannie Mae Short Sale Affidavit confirming that the transaction is an arm's-length transaction.

Step 4: Contract Review

You can submit your accepted contract directly to Fannie Mae through the HomePath Short Sale Portal. As the first lien holder, Fannie Mae will begin the process of reviewing the contract terms and will communicate through the portal if there are items in the contract we want to counter before approving or denying your contract submission. You will be notified via email throughout the process if information is being requested, a valuation has been ordered, a counter has been made, or a decision has been made regarding the contract.

Step 5: Prepare to Close

Once you receive notification that the contract you submitted on your client's behalf has been accepted, prepare your client for closing — this portion of the transaction is very similar to non short sale transactions. As final documents are being prepared, work to schedule the closing with the title company. At closing, your client, the buyer, and all parties involved in the transaction must sign a Short Sale Affidavit confirming that the transaction is an arm's-length transaction between parties who are unrelated and unaffiliated by family, marriage, or commercial enterprise. Remember that all funds that change hands must be disclosed to and approved by the mortgage servicer and shown on the HUD-1, which is why it is important for you to understand which closing costs are acceptable and which are deemed unacceptable and explain them to your client.

Contact Fannie Mae at 1-800-2FANNIE if you have any questions about the process or call 1-800-232-6643 to reach the HomePath Short Sale portal support center if you have any questions about how to use the HomePath Short Sale Portal. Training aids can be accessed from the Short Sale resource page by clicking here.