The PMI Group, the embattled mortgage insurer, granted Fannie Mae mortgage servicers with short sale rights late last week, a measure that allows further access to the pre-foreclosure sales strategy.
Typically, a mortgage insurance company must approve short sales that occur with a guaranteed loan, but a HousingWire story reports that under PMI’s new rules, servicers can now complete short sales and deeds in lieu of foreclosure without its own, separate approval.
PMI is just the latest in mortgage insurers that have given Fannie such powers. Already, Genworth, MGIC, Republic Mortgage Insurance Co. and Radian Guaranty have loosened their own short sale regulations, loosening control over a sales strategy that, despite its usefulness, has been plagued with excess regulations and loopholes.
In the HousingWire piece, a spokesman for Fannie said that fluidity will be the key thing in short sales going forward.
“A Fannie spokesman said obtaining these agreements from the insurance companies is part of a broader effort to speed up the process and boost short sale completions,” the article stated. “The mortgage giant has also distributed its short-sale processing software to multiple listing services around the country.”
According to data from the Federal Housing Finance Agency, which regulates Fannie and its brother GSE, Freddie Mac, the two firms completed 28,000 short sales and 3,000 deeds in lieu of foreclosure in the fourth quarter, which was down from the 31,000 transactions in the third quarter.
Those numbers represent a substantial uptick from historical short sales data, which had always lagged behind REO sales in total volume. According to HousingWire, in the fourth quarter of 2008, the GSEs completed just 6,000 short sales and deeds in lieu.