Under the new Freddie Mac short sale guidelines, service members can now qualify for a short sale even if the property is no longer the service members' primary residence. Essentially, this provides a major opportunity for service members who moved and established a new primary residence as a result of PCS orders, but now decide to do a short sale on their former residence.
This change to Freddie policy gives service members who have already moved due to PCS orders and have established a new primary residence the same benefits of a short sale as if they had initiated the sale when they had first received their PCS orders. These benefits include exemption from making a cash contribution and exemption from the general requirement that the borrower's current monthly debt-to-income ratio must be greater than 55% if the borrower is current or less than 31 days behind on payments. To be eligible, the service member must have purchased the property on or before June 30, 2012.
These changes are summarized in the latest Freddie Mac Bulletin and will go into effect after August 1, 2014.
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