Over the last few months, it has become apparent that Fannie Mae is more interested in foreclosing than approving short sales.  The scenario is the same over and over again.  The BPO comes in at one price and Fannie Mae adds 20 or 30% and says that is what they will accept.  Some have suggested that they are trying to get next year's prices if the current price trends continue.  In the meantime, buyers are unwilling to overpay by that much and are backing out of the contracts when they hear the outrageous prices that FM is asking.  If you dispute the value, they reject it and then consider their number good for an additional 90 days from the decision on the dispute.  Has anyone else been experiencing the same kind of problem with Fannie Mae being the investor??

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Fannie Mae investors are all over the board with their price demands. I have 2 "nearly" identical condos listed. One is a second floor unit (2 floor, 4 unit building) and the other is a flat in a 3 unit building. Both are the same size but the flat is in a little better condition. 

Both received nearly identical offers. Fannie Mae is demanding $94,000 (34% above offer) on the 2nd floor unit and $84,000 (20% above offer) on the flat which is the better of the two. Neither qualifies for any loan because of the high number of investor owned units in the condo community. If they could qualify, it is highly doubtful that either would appraise for the value Fannie Mae is demanding.

We have escalated, escalated, escalated but getting nowhere. Fortunately, we have now secured a cash buyer (owner/occupant) willing to pay $84K for the one but we aren't getting any interest at all on the other.

Here is another one to add to the fracas!  Sun Trust has the mortgage on a condo in Panama City Beach, we had an offer in March of $185,000 (2 bedroom) and was almost to approval, it was with the investor, then it changed servicers to Seterus, we started over, we got to that point again and it switched back to Sun Trust, we started over again even though it was through the process once.  They came back with a counter of $245,000.  We re-countered at $205,000, they said no.  We disputed the value by sending an appraisal that was done on the same size unit on a different floor that was 3 weeks old at $205,000, comps that showed the last sale of that size unit in that building was $199,900 sold 1 month ago, another short sale that was just approved (same size in same building) at $200,000 and other comps in other buildings next door.  Also showed that NO 2 bedroom on the Gulf had sold in Panama City more than $235,000 in the past 6 months.  I spoke with the BPO agent (yes a BPO, not an appraisal) and she wouldn't tell me what she valued it at, but it was well below the $245,000.  The investor (so we are told) said no.  I have advised the buyer's agent, and they buyer is willing to hang on. I put it back on the market at $245,000, of course, not one call.  We plan to try the offer again and hope for another outcome.  Any other suggestions?

Hi Mike,

Last week, I wrote about this exact subject in my newsletter and re-posted it to Active Rain, click HERE for the article and the 150 responses (that ranged from agreement to labeling me a conspiracy theorist.)

For Brian's suggestion below, as of November 1st, Freddie no longer require MI approval on short sales, click HERE for Freddie details and we can only hope that Fannie will follow suit.

Thanks,

Mark

This is what I believe is going on with the Fannie. I lost a SS listing to a fannie foreclosure. The buyers offer was $20k higher than a model match comparable two doors down. All parties knew that it would not appraise. B of A, Fannies servicer told me their appraisal came in $1000 dollars higher than the model match Comp. Fannie foreclosed put the property back on the market through Homepath  offering financing with NO APPRAISAL REQUIRED!  Any information that the seller has obtained before, during or after a short sale that does not close IS material fact known by the seller no matter the department obtaining those facts. and is required by law and business ethics to be disclosed to the buyer when fannie goes to sell the property as a REO. Fannie knows that the appraised value yet sells the property to unsuspecting buyers waiving the appraisal. AGENTS BEWARE Advising your buyer to buy a Fannie property without an appraisal may make you financially responsible for improper advise. Fannie Mae is obviously out to decieve the Real Estate Industry Shame on us if we allow it to happen. I say BOYCOTT ALL FANNIE LISTINGS AND HOMEPATH PROPERTIES!   

I agree and have the same scenario. Nationstar is the servicer and Fannie the investor. No physical BPO was ordered (lockbox indicates no interior activity). The first go around resulted Ina demand for a Net amount that exceeded the payoff figure. The second go around raised the net. Both exceed an appraisal that was paid for with a licensed appraiser by $80,000. So far we are being forced to get a buyer to either a) pay above market, b) force a fraudulent appraisal to get a loan or c) find a cash buyer who would be crazy enough to pay that high above market. There is no way we can win. Nationstar has currently refused to allow file to move forward but says they can appeal. No appeal yet. Left message with Level 2 Fannie but no response. Isn't there any way this issue can be brought to anger federal regulator? How can Fannie demand such inflated prices? This seems to be what caused the housing mess years ago and Fannie is the trigger for the next round of housing crisis. Why is Fannie immune to the various State's lawsuits that dealt with unfair foreclosure practices? I'm confused.
Sorry ipad not my friend today with word replacement. I meant another regulator not anger regulator.

I am experiencing Exactly the same problem, I have 3 files pending, note owned by Fannie, and they have countered at unrealistically and unsupportable values. I have even supplied appraisals showing true market value opinions, Fannie doesnt care. They have a new automated valuation system, and disregard their own ordered BPO. On one file they, gave me a verbal approval, and when buyer agreed to the new price after a week of review, they rejected the new full offer and countered again at a much higher value. I cant see any way of stopping this EXCEPT suggesting my sellers engage counsel, but this will likely result in a deed in lieu agreement.

The only real fix for this is to have the lazy politicians who bailed out FNMA get off of their butts and make FNMA responsible to someone - the taxpayer, the gov't, anyone. These people are now just sucking money from us, the fed, and us, the now "investor-hostage" and not caring about anyone in the whole mess but keeping their own jobs until they retire. This sort of thing wasn't even a blip on the radar of the "debates". I don't see a fix coming soon.

A DIL would thrill the bank - full damage to the homeowner, less expense to the bank and the bank gets to keep getting "maintenance" money to take care of the now REO account. The pinheads at FNMA jacking up these prices obviously would be happy for the DIL, too. Not exactly a punishment for being unconscionable pinheads continuing the fiscal housing mess, now is it...

Hello All,

  I am a member of the California Association of Realtors Distressed Property Task and I have brought this to our groups attention and that we MUST  do something at the state and national as an organization.  I have lost 2 to foreclosure in the last 45 days ( had not lost one in almost 5 years!!!) and both were fannie.  One had a value in excess of $35k over market. Tried to dispute and that was a big waste of my life.  Now we have another fannie and the value and offer are both at $95k, the servicer countered back to a net of $120 to the investor and the negotiator point blank told us that if we do not accept and try to dispute this it will go even higher.  There is no way it would appraise even if we went there.  FOLKS, ALL OF YOU READING THIS, WE NEED TO RAISE ABSOLUTE HELL WITH OUR CONGRESSMEN AND WOMEN IMMEDIATELY AND GO TO THE MEDIA!!!!  I am about to raise cane with the task force ( hell who knows I might get booted from it for my efforts) and we all should post videos on you tube.  Call you local tv station and let's expose this now.  We gave these a..holes hundreds of billions of dollars and this is our thank you. DeMarco needs to go immediately.  If we walk to slaughter then we deserve what we get.  We are ALL working for nothing on these fannie properties (because they are not going to close) and I am 100% sure freddie will follow in like kind fashion.  People, I am not a rebel, I am a seriously struggling real estate broker and I  have lost thousands in commission and if this continues I will lose my business.  If we do not stand up and expose this to the public we might as well throw in the towel. I am at the point of not even listing freddie or fannie short sales because going in we know they will NOT be approved.  We need to get mad as hell and call these idiots to the floor now, not tomorrow,not next week, not next year.  I am going to call our local tv station today to see if I can speak to an investigative reporter. you should try the same.  angry is not the right word......

I totally agree.  Our local Fox station is very interested in doing a story right after the election.  I have just sent emails to my congressmen and senators.  I live in Phx and this is a big, big problem.  Something is going on behind the scenes that we don't know about where somehow its more advantageous for FM to sabotage the short sale and take the property back.  It might have something to do with them bundling tons of properties for select investors so they can buy at pennies on the dollar.  I didn't believe in backroom deals before, but I hear about them more everyday, and to make matters worse, we just accept the unethical behavior as something normal.  Please, please, please, lets get some honest people in Washington.  Corruption and cover-ups are rampant and we only hear about the tip of the iceberg.  

Hi Mike, I'm a Chandler AZ agent and sent off to Rep's as well.  Maybe we can think of a way to partner up on this to help the SE Valley.  This is crazy.  I understood from someone that Fannie is looking at the news articles and just blanket stating price points because of our "growth".  They are disregarding the fact that it's neighborhood, city and locale based and not even using a baseline on any of these areas.  This is crazy.

I agree with the latest post to look up their Facebook and Twitter and start banging them with their policies.

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