J.W. Elphinstone - The Associated Press | Posted: Saturday, January 10, 2009 11:00 pm
NEW YORK -- A Fannie Mae executive said Friday the mortgage giant is testing a new program aimed at reducing the number of foreclosures by pre-approving sales where homeowners sell houses for less than the amount owed on them.
Kevin Brungardt, vice president of servicing management at Fannie Mae, said the company will determine an acceptable listing price for a so-called "short sale" even before a buyer has been found.
The news about the pilot program was first reported by The Wall Street Journal.
The company began testing the program in Phoenix and Orlando, Fla., at the end of December and said it will run for three months. About 400 homes in the two markets qualify for the pilot program. Fannie will evaluate the program's effectiveness with real estate agents and its pilot partner and decide whether to broaden the program.
The Wall Street Journal reported that Fannie is pairing up with Countrywide Financial Corp., a subsidiary of Bank of America Corp., on the program.
Fannie Mae wants to make the short sale as fast and easy as possible so distressed homeowners can avoid foreclosure. Real estate agents nationwide have complained about how long it takes for a lender to sign off on a short sale, often derailing the deal and leading a homeowner into foreclosure.
Fannie Mae and sibling company Freddie Mac were seized by federal regulators in September. The companies own or guarantee around half of the $11.5 trillion in U.S. mortgages.