THIS ARTICLE IS FROM NAR

Beginning in the latter part of 2012, a number of REALTORS® across the country reported that Fannie Mae had started jeopardizing short sale transactions by requesting purchase offers at significantly higher prices than market values. REALTORS® continue to report that Fannie Mae’s actions have led to a decrease in the number of Fannie Mae short sale transactions, an increase in the number of borrowers going through foreclosure  producing further negative effects on surrounding property values.

Fannie Mae

  • On Nov. 5, 2012, NAR met with Fannie Mae executives to discuss valuation issues related to short sale transactions. Fannie Mae’s short sale team indicated that they made changes to some of their short sale policies in an attempt to copy efficiencies they’ve achieved through their REO broker network.  These changes were intended to implement similar measures for short sale transactions.  Fannie Mae stated they intended to minimize bank involvement and have more direct communication with listing agents in short sale transactions to speed up decisions and processing of short sales.
  • NAR requested that Fannie Mae provide an improved process for real estate agents to request list price reduction when the agent feels the value is out of line with the local market. Additionally, NAR expressed the need for more visibility and transparency into Fannie’s valuation and escalation processes.
  • As a result of these efforts, Fannie Mae contacted NAR on Dec. 19, 2012, acknowledging the persistence of the issue and efforts to improve communication on the process.   NAR contributed input on the development of Fannie Mae’s HomePath short sale site that includes an escalations contact form to resolve some of these issues.  While these efforts are an important first step, the underlying problem of borrowers entering foreclosure due to unsubstantiated list price demands remains.

Federal Housing Finance Agency

  • On Jan. 8, 2013, NAR staff met at the Federal Housing Finance Agency (FHFA, Fannie Mae and Freddie Mac’s regulator) to discuss persistent problems with Fannie Mae short sale transactions.  During this meeting, FHFA and NAR held a conference call with REALTORS® from across the country regarding Fannie Mae’s short sale valuation process.  A summary of the call is as follows:
    • Since August, there has been a dramatic increase in values for short sales with Fannie Mae.  This seems to be the rule rather than the exception.  In the last 90 days, short sale approval rates have ranged from 20-50 percent.
    • When short sale valuations are disputed through the escalation process, some Realtors® felt cases were not being thoroughly reviewed by staff.
    • Fannie Mae appears to be asking for more than the fair market value regardless of the valuation method used—AVM, BPO or appraisal.  Fannie Mae’s escalation staff is in Dallas with in-house appraisers on staff who are assigned to particular regions of the country. 
    • Complaints about Freddie Mac have not been as numerous, though some markets (e.g., Nevada) have experienced short sale pricing challenges with Freddie Mac as well.
  • At the conclusion of the meeting, FHFA GSE examination staff requested that NAR provide specific short sale cases sent by REALTORS® for review and agreed to meet in the coming weeks to identify patterns and continue to work with NAR on finding a reasonable resolution.

Next Steps

NAR remains concerned that Fannie Mae’s recent short sale policy changes could significantly increase the number of borrowers ending up in foreclosure and hamper the success of FHFA policy changes to Fannie and Freddie’s Standard Short Sale processes. NAR will continue to work with our state and local associations, the GSEs, and FHFA until fewer borrowers end up in foreclosure when a short sale could have been completed, benefiting all parties to the transaction.

What can REALTORS® do?

NAR encourages REALTORS® to submit problematic transactions on for escalation review to www.homepathforshortsales.com.

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Hello Everyone -

So far, NAR petition and Whitehouse Web petition are having NO EFFECT on these crooked folks.

Short Sale in Aquia Harbor, Stafford, VA - 30 miles south of D.C. Beltway.  Old, raised rambler, no basement, no upgrades, but overall good shape.  Home next door sold in November 2012 at $165k, same house.  Original contract $169k. FNMA kicked 2 previous contracts back, asked for minimum of $185k.  We got a 3rd contract at $185k, and they upped the counter to $220k.  We disputed on Homepath website direct with FNMA. More than 21 other comaparables, (see attached valuation dispute) disqualify their $220k counter.

After dispute was reviewed, here's their answer:

After a "2nd look" following the Homepath dispute the investor  wants to NET $204,765.54 and if we can get an offer that will NET that amount,  Greentree can issue an approval letter in 5-10 days.
The ABSOLUTE minimum Greentree can even send to the Investor  (which will most likely be countered) is an OFFER of $199,500.00.
I GUESS IF YOU GET MONEY CREATED FROM NOTHING DIRECTLY FROM THE FEDERAL RESERVE THROUGH QE TO INFINITY, YOU CAN JUST DEMAND WHATEVER YOU WANT. AND IF YOU DON'T NEED TO HAVE AN APPRAISAL WITH YOUR FUNNY MONEY FINANCING, YOU CAN JUST NAME YOUR PRICE IF ANYONE IS FOOL ENOUGH TO BUY YOUR REO, WHICH IS WHERE THIS WILL NOW GO AS WE BELIEVE THAT WE WILL NOW LOSE OUR THIRD BUYER, UNRESPONSIVE TO AN EVER MOVING PRICE UNRELATED TO REAL MARKET ACTIVITY. THIS DISGUSTS ME. I HAVE ZERO RESPECT FOR THIS INSTITUTION, AND I ASSERT THAT IT IS REPRESENTATIVE OF THE STATE OF THE U.S. GOVERNMENT IN GENERAL.
Attachments:

The only 2 short sales I could NOT get approved due to hugely over inflated BPO's which forced buyers to walk were FNMAE owned notes.  Happened 4th Q of 2012..I no longer take them.  Why beat a dead horse? 

I used to do BPO's for Fannie as an REO agent. When I would turn in my BPO and value.. every single time.. they would come back and tell me I had to replace my comps with the comps they found (even if the comps they found were not within their own specifications they required agents to use to find comps.. it was amazing to me). They would refuse my BPO if I did not adhere to their demands. Every single time.. I fought them.. and won.. I showed them that they were asking me to be fraudulent on my values and I wouldnt do it.. and I would report them. A BPO is a Broker Price Opinion; but for some reason they felt that they should force their opinion to become mine. I asked them why even hire me if they are going to dictate what I do.. just one of my many "Fannie = fraud stories (I have many). 

I'm trying to do more research on this.

Attachments:

when I listed a short sale in a very rural area in December, Fannie immediately asked for access for an appraisal, not bpo.  would not disclose value.  the home had been on the market over a year at a very high price while the owner struggled to make payments and kept thinking they may clear it.  The listing agent was sellers  family..and they finally said 'call a short sale agent' and get this done...Fast forward, I get a very good conventional offer..and  months later a ridiculuous counter from NS for $291K.  Valuation dispute entered, my cma shows the home actually has new sold comps closer to it in location and acreage..which drop the value!  Homesteps denies, and keeps original 'appraised' value. cancellation signed last week.

Does anyone know of any further progress with this issue? 

I just used the homepath site to dispute a grossly exaggerated value - however it provided absolutely no relief except for Fannie to uphold their bizarre value.  Even the factual information they have about the property is incorrect ( ie they are valuing it with a garage - there is no garage etc) ...but they don't care. 

can i ask how you found out how they are valuing?  they will not tell me any information about the appraisal or how they came to the value on it.  I even sent them in the listing history of the home replete with all showing comments from the buyers agents.

I am a buyer and listing agent forward email from GREEN TREE  tell us file under review and  appraisal value

came back at 177K ( we offered 161K). The said will check if we will get the counter 

I would encourage any and all to attend.

Fannie Mae Short Sales and Working with AMCs: Real Property Valuation Forum 

05/14/2013   |  1:00 PM - 3:00 PM
Location: Marriott Wardman Park Hotel, Thurgood Marshall Ballroom NE

http://www.realtor.org/educsessMid.nsf/allpages/13MYRPValueForum

How did it go?

send an e-mail to [email protected]

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