Short Sale Assistance for Military Families

by The KCM Crew on July 2, 2012 · 5 comments

in Short Sales

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Military families have just been given help to sell their homes when forced to move because of their service. Permanent Change of Station (PCS) orders often require quick moves and can create hardship for military homeowners who are underwater on their mortgages and therefore cannot sell their home without taking a loss. Homeowners who receive (PCS) orders now will be eligible to sell their homes in a short sale even if they are current on their mortgage. Previously, many service members felt their only option was either to maintain financial obligations on two residences or to default on their mortgage.

Under the new policy, Fannie Mae and Freddie Mac will not pursue a deficiency judgment or any cash contribution or promissory note from members of the military with a change in duty station for any property purchased on or before June 30, 2012.

Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA) explained:

“It is in everyone’s interest for the men and women serving in our armed forces to focus on the important job they are doing defending our country, rather than worry about the maintenance and leasing of a property in another jurisdiction.”

The full news release with eligibility requirements can be found here.

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  • Military town guy

    This appears great on paper. The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and the Office of the Comptroller of the Currency need to take this a step further. They should reduce the wait period to buy another home in another area specifically due to PCS orders. My understanding is that currently the wait period is 2-years. This 2-year period should not even apply to military and it should be waived, therefore they should be able to buy another home immediately after bank/lender settlement of the previous home. As you know there are several acceptable hardships for a short sale, this one should simply be “PCS”, the deficiency is forgiven and no wait period to buy again.
    Anybody else out there on-board with me on this one?

    • http://www.facebook.com/cindycraigjones Cindy Jones

      If they haven’t missed a payment and there are no other blemishes on their credit then allowing them to buy again makes sense. The question is do they want to? I’m finding a far smaller percentage of military families coming to the DC area on 3 year orders want to buy a home now. This may be different in other areas where prices are more reasonable.

  • http://www.facebook.com/knaatus Kati J Naatus

    I’m on board with you Military town guy. Things have been an absolute nightmare with our home in WA state. We recieved orders in March to report the first week in July 2009. We were forced to rent our home for a loss each month. We’ve been in San Diego for 3 years, and are getting ready to PCS across country in a few months. Our house in WA is FINALLY set to close on August 3rd as a short sale, and now we’re being told that we may have to wait to buy. There should be special consideration for military families who had no choice in the matter and had to move on miltary orders. It’s an especially hard pill to swallow when you consider that we can buy a home significantly under BAH in the area that we are moving to.

    • http://www.facebook.com/cindycraigjones Cindy Jones

      Sounds as if you were not eligible for HAP?

  • http://www.facebook.com/cindycraigjones Cindy Jones

    I’ve been assisting military families in my area in Northern Virginia for the last few years with DoD HAP sales, short sales and VA Compromise sales. The smart lenders were already considering PCS orders as a hardship and not requiring as many hoops. Hopefully the new guidance on Fannie and Freddie loans as well as the rules from the $25 Billion settlement will help get these sales done faster.

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