On Tuesday, Freddie Mac issued a press release stating they were updating their timelines on processing short sales, in order to add transparency and expedite the process.

Today, we learned that Fannie Mae would be instituting the same changes.

Primarily, they hope to have servicers provide more updates to borrowers on the status of the process, while having decisions on short sales made within 30 to 60 days of receiving an offer.

The full details (from Freddie Mac’s website), include: 

Freddie Mac’s new short sale timelines require servicers to make a decision within 30 days of receiving either 1) an offer on a property under Freddie Mac’s traditional short sale program or 2) a completed Borrower Response Package (BRP) requesting consideration for a short sale under HAFA or Freddie Mac’s traditional short sale program.  (BRPs are standardized assistance applications developed as part of the Servicing Alignment Initiative.)If more than 30 days are needed, borrowers must receive weekly status updates and a decision no later than 60 days from the date the complete BRP is received.  This will help servicers who may need more time to obtain a broker price opinion or a private mortgage insurer’s approval on a BRP or property offer.In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.Freddie Mac will use the new timelines to evaluate servicer compliance with the SAI and its own servicing requirements.Freddie Mac completed 45,623 short sales in 2011, a 140 percent increase since 2009.  Overall, Freddie Mac has also helped more than 615,000 distressed borrowers avoid foreclosure since the housing crisis began.

My question to Fannie & Freddie is: or what?  If servicers don’t comply with this list of changes, what’s going to happen to them?  Will you begin paying a portion of the servicing fee to them on the back end and, if your standards aren’t met, withhold a portion of that payment?  If a servicer doesn’t meet the above standards on a set percentage of files, will they lose the right to service these files?

One of the biggest problems with the whole loss mitigation process has been accountability.  From government mandates to bank executive directives, it’s hard to enforce policy when no one will be punished for ignoring it.  Simply put, consequences for non-compliance must be put in place.

Don’t get me wrong – if a sincere attempt to improve the process is being made, then I applaud it.  However, my BS detector tells me this is another attempt to win public favor and I’m going to need to see servicers actually begin complying, before I buy in…

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