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AGENCY REVIEW A LOOK AT THE GSES' LATEST DELINQUENCY NUMBERS AND TOP HEADLINES 5.59% fannie single family freddie single family 5.07% May 2013 fannie » 2.83% freddie » 2.91% 4.55% 4.03% 3.51% 3.00% 2.48% note: Delinquent loans reported here include all single-family loans 90 or more days past due as a percentage of portfolio size. Historical data covers a moving 12-month period. Source: Fannie Mae May 2013 Monthly Summary and Freddie Mac May 2013 Monthly Volume Summary. 1.96% 1.44% 0.92% 0.40% /13 /13 04 05 /13 /13 03 /13 02 /12 12 01 /12 /12 11 /12 10 09 /12 /12 08 /12 06 07 /12 /12 05 /12 04 03 /12 /12 02 01 /11 /11 11 12 /11 /11 10 09 /11 /11 07 08 /11 /11 06 05 Fannie Mae Announces New Effort to Streamline Short Sale Process In an effort to speed up the short sale process, Fannie Mae is increasing early communication with real estate agents by asking listing agents to register accepted short sale offers with the GSE. Fannie Mae says this will bring greater transparency to the process and will allow the GSE to be more proactive when working with servicers to complete short sales. "Fannie Mae recognizes the very important role real estate professionals play in the short sale process and we want to work closely with them to get short sales done," said Jay Ryan, Fannie Mae's VP of real estate sales. Agents can register their short sale offers through Fannie Mae's short sale-dedicated website, HomePathForShortSales.com. To submit offers, agents will be asked to provide information such as the property address, MLS details, the offer specifics, and subordinate lien information. In addition, other supporting documents and information is required, such as scanned copies of the sales contract, estimated 20 net sheet or HUD-1 settlement statement, and borrower authorization form. "Our objective is to help stabilize neighborhoods by completing short sales as close to fair market value as possible," Ryan said. "We believe this new process will help ensure all parties are in communication early on and are able to come to an agreeable and appropriate sales price." For agents who encounter situations that stall the process—such as valuation disputes, delays by servicers, or uncooperative subordinate lien holders—Fannie Mae advised agents to place a request online to escalate the process. Once a case is escalated, Fannie Mae will contact the agent or servicer to address the specific issue hindering the sale. The escalation tool was first announced in February 2013 and has helped to successfully close more than 10,000 short sale cases. In 2012, Fannie Mae completed 73,528 short sales. FREDDIE MAC: FINANCIAL ASSETS CAN BE USED AS QUALIFYING INCOME Freddie Mac is hoping to spread information about a rule that allows borrowers to leverage financial assets such as retirement accounts as qualifying income when applying for mortgage loans. Individual retirement accounts (IRAs), 401(ks, distributions from retirement accounts, and funds acquired from the sale of a business can all contribute to a potential borrower's qualifying income, according to the GSE. In order to count as qualifying income, these financial assets cannot already be included as a source of income and they must be accessible, meaning the borrower must not incur a withdrawal penalty to retrieve the funds. "Although it took effect in the spring of 2011, word has apparently been slow to spread judging by the calls we field from inquiring borrowers and housing professionals," wrote Christina Boyle, VP and interim head of single-family sales and relationship management, and John Watkins, VP and single-family chief credit officer, in a blog post on Freddie Mac's website. The rule is especially helpful for "qualifying retiring Baby Boomers and other savvy homebuyers who have limited incomes, but substantial financial assets," according to Boyle and Watkins. Financial assets are not counted in totality when used as qualifying income. The eligible assets are multiplied by 70 percent and transaction costs such as down payments and closing costs are subtracted. That amount is then divided by 360 months to get the qualifying figure that is added to the borrower's monthly income. Boyle and Watkins also noted that dividends, interest payments, trust distributions, and Social Security payments can likewise contribute to qualifying income when applying for a mortgage. KNOW THIS FHFA rated both GSEs as "Critical Concerns" in the credit risk category due to their large legacy books of single-family mortgages.