Short Sales Are Not Loan Modifications
In response to questions about the Washington State Department of Financial Institutions (“DFI”) Interpretive Statement IS-2009-01 regarding loan modifications, DFI has published a set of Loan Modification FAQs. In the FAQs, DFI clarified that short sales are not loan modifications as follows:
Are short sales a type of loan modification under the Mortgage Broker Practices Act? No. Pursuant to Interpretive Statement IS-2009-01, a loan modification includes: forbearances, repayment plans, a change in interest rates, loan terms (length), or loan types, the capitalization of arrearages, and principal reductions. Refinances or sales of the property are not loan modifications.
The DFI Loan Modification FAQs are available at http://www.dfi.wa.gov/cs/loan-modification-faq.htm.