I'm sure many of you are anxiously waiting for information regarding the results of the conference call set up to discuss issues with Fannie Mae evaluations on Fannie Mae short sales. I will attempt to summarize said call, but first, I want to point out once again the value that NAR provides for our industry. Without their continued commitment to fight for our causes, this would not have taken place.

Probably the best way to summarize the call is that is was an open, direct and passionate discussion. Some of the highlight points were:

1. Clarified the Fannie valuation issue is now the rule -not the exception re: Fannie Mae short Sales

2. This appears to be a Fannie Mae problem - not the servicers

3. This is not an isolated geographic problem, but generally throughout the country

4. There appears to be some signs that we are seeing the same trend maybe beginning with Freddie


I believe the main objective was to provide sufficient date to show this issue is real and needs quick attention. I feel this objective was met. I believe NAR and FHFA are truly committed to work with FHA to find solution(s). Recently, Fannie Mae working with NAR initiated the Homepath Short Sale web site and one of the proposed segments of this site is to be able to escalate valuation issues. Many of you may already know about this site, but those who don't, please use the link below and check it out.

http://www.homepathforshortsales.com/

It was agreed there would be continued communication. I would suggest that you work closely with your local and/or state Realtor Associations and provide good, concise examples of Fannie Mae short sales that you can "factually" show examples where Fannie is using values that are clearly in excess of FMV. I will attempt to keep you posted on updates if and when I received them. Thanks again for all your support and response

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Hi Ken,

Thanks so much for this information.  I am currently working on one with Chase that the BPO value came in $50,000 below the countered price by Fannie.  How can I convince a buyer to pay such a price.  I have one of Delaware's US Senators offices working with me on this as it is so ridiculous.  We have ordered a full appraisal and are waiting to submit it next as I disputed and they only came down $10,000.  This situation is a nightmare and let's hope your call shook some heads and works to help correct the problem.

I have had 2 short sales in the last 4 months where valuation was in excess of fair market value and had to put the properties back on the market.  Fortunately, our market has shifted to a severe Seller's Market, and I got cash offers that just made it to their counters.  With conservative appraisals...especially FHA which is probably 70% of all the loans happening in my market, there are lots of failed sales.

One of my agents recently has been doing BPO's for Fannie Mae short sales.  He says that they pay very little and have ridiculous guidelines for information required...and then they want the value raised most of the time.  It is frustrating when you do a BPO and then the servicer wants a higher value than what is true.  They fail to understand that if we misrepresent the value, there is potential liability for the brokerage completing the value.  I have to disclose the number of BPO's done to my E & O company each year.  I think they go on Zillow and look at their zestimate which is usually wrong and then determine that as their ballpark value.

Fannie Mae on their foreclosures seems to give total priority to Homepath Financing since they will have no appraisal issues for value and as long as property is in relatively good shape for condition as well since there is no appraisal done.  Perhaps that is their strategy...to take the property back and then do Homepath Financing to get more money.  What doesn't make sense about that is they have to pay the cost of foreclosure to do this.

Well Ken, thanks for the update; not really sure what we gain from your phone conference "highlights" though, most of us who have these issues are already aware the problem is with FNMA not the servicer. We have already been told its the 'rule' not the exception; we know its a national problem;  and its becoming a trend throughout the industry not maybe Freddie too.

My current experience has so far resulted with no progress; after almost a month of waiting for a level II specialist to reach out in reply to my request for consideration, last week I finally received call only to be informed that they (Fannie Mae) were going to make a valuation of my request of the FMV; and that I should hear from them soon..?! I was also told that the final determination of FMV will take into account various other factors, such as time of delinquency, and amount of delinquency; losses to other investors; all of which are considered in their final FMV... in my case, a vacant 900 sq. ft. property that overlooks the southern US boarder in San Diego county; that sold in a short sale for $58K, Nationstar wanted $61,500 which the buyers agreed to pay... but, wait for it... Fannie Mae in their superior vision increased the FMV to $96,000 to NET them $88K.

Now that's a 64% increase in value... which is an incredible improvement in the market wouldn't you say... I guess there is hope for a economic recovery in the RE Industry in 2013... NOT...!!!  

@Phil:  LOL!  64% incline in ANY neighborhood would be a welcome sight!  I think we all need to get plugged into C-Span/CNN and connect the dots to figure out why the government is coming in with these obviously ridiculous 'values.'  Who are we trying to woo for dollars this week by showing inflated values on negative assets?  China perhaps?    -_-    Good Grief

Hi Ken, I work short sales in Las Vegas...have about 80 in process at any given time.  We've had the same issues of course and most FNMA values are coming in nearly 150% of what we would consider FMV.  I've got several specific examples, all pretty recent.  If you would like me to send you any details to help your fight, let me know.  I will work with my own local and state legislature too.  Thank you for speaking up on everyone's behalf, and I'm here to help if at all possible...whatever you may need.  Thanks!

Julie Hanna
702-343-0035
[email protected]

Just had one this morning.  Freddie Mac owned, serviced by Citi.  Property on the market 176 days, value of $75,000 with an offer at $70,000.   Counter offer I just received was for a required minimum net proceeds in the range of $195,000 - $205,000.  Citi negotiator indicated that the counter is not based on the BPO value, but some number, based on other factors, that Freddie determined was the acceptable amount in order to approve the short sale. 

So, it appears that now Freddie and Fannie are not basing their counter offers on the BPO values at all.  If their counter offers are going to come back at 3 times the property values, there won't be any short sales with Freddie and Fannie Mae.

to the contray, they order a BPO however, I am told it has very low priority. in my current file the BPO was between $40K - $70K... FNMA wants to NET $88K...?!? 

Ken, 

I am also in Arizona and have experienced this phenomenon with multiple lenders.  I left you a voice message and can get specific examples to you.  I have one right now in Chandler that Fanniemae wants $141,000 and yet it only appraised for $119,000 and is in need of major repairs.  I provided the listing history, appraisal, estimate for repairs and Fanniemae rejected the offer.

Ken - Thank you so much for all your efforts and time to present these issues.  I'm finding that the over-inflated values only hurt our clients, their properties, the neighborhoods and eventually the real estate market because we simply cannot sell them at the values required.  As a result, the properties sit vacant for years and eventully deteriorate, further lowering the values, and in addition to being an eye-sore, they are often subject to frozen pipes, vandalism and become home to vagrants.  Nothing good results from over-inflated values.  Thank you again for your work on this!   

I absolutely agree, Paula.  Everything you listed are ticking time bombs to set the economy on end again.  I am trying to reach out to local legislators to come up with better ways of managing these problems.  Cities and Counties first of all can start charging HUGE fees to lienholders who have boarded up windows, uncut grass or any kind of nuisance whatsoever.  This would help stabilize budgets due to the decrease in sales volume and sales tax losses from real estate related revenue.  MERS already undercut the counties out of billions of dollars in recording fees and they are not happy about it. 

This may be a federal problem, but we can start making some common sense grass roots decisions to improve our own local communities and make it VERY difficult for these lienholders to bully our neighbors and constituents.

I can't tell you how glad I am to see this post. I wondered if it was me with this opinion of what FannieMae is doing.

I read that other agents have won their valuation disputes; in our experience unfortunately they have gone for the most part ignored. They actually recently closed a file where the processor at BofA said they approved it and would send it to the investor after three months of asking for another set of financials only to let us know that the formerly accepted price of $92,000.00 (which had started out at $83,000.00 according to their fast track DTS pre-approved short sale process) would no longer be acceptable and the price would now have to be $130,000.00. We could not find any rhyme or reason, until we noticed that while they delayed the approval of our short sale at $92,000.00, they listed two REO's in the same community for just over $130K. Then it all made sense, a comparable at $92K would not support a sale of their REO's at such an inflated price. They have completely ignored every inquiry since and they just arbitrarily closed the file.

Just last week, a similar response on two other files. We did have the BPO results by the way, in all three cases, at or below our previously agreed to contract price.

I am also really developing a serious concern for the fact that FannieMae can finance a property without an appraisal, It seems to me like too many buyers in their frustration to find a home they can actually buy, are willing to sign and finance a property at a price that is far above comparable value just so they can have that opportunity to own a home. While that is very good for FannieMae, is that fair to the buyer? If they bought any other home from any other seller, the lenders would not allow the buyer to pay that much. They would require an appraisal and then, most likely, hedge their value to the low side of the comps to protect the "lender's" interests. However, no appraisal is needed if it will protect the "buyer's" interests. Why should FannieMae be able to finance any property without a certified appraisal, just like any other financed transaction? Would we still have such a hard time obtaining FannieMae or FHA financing for resale condo communities if FannieMae had already sold all of their REO's? Just wondering.

Wow..! does this all sound familiar... been there done that...! the secondary market (FNMA & FHLMC) is going to recreate exactly what got us into this mess to begin with...! "  if you are not willing to learn from the past you are destine to repeat it"... Insanity...!!! 

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