Fannie Mae Valuation - Call update
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
Replies to This Discussion
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Permalink Reply by Phillip Allen on
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call fnma directly... send them a authorization ltr to speak on be-half of the seller... request a level II specialist to review their valuation... make sure to advise them of the NOS.
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Permalink Reply by Kevin - Greenville, SC on
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Short Sales Hit Record High, Fannie and Freddie Report
Short sales reached a record number in the third quarter of 2012 for Fannie Mae and Freddie Mac-backed loans, according to the Federal Housing Finance Agency, the mortgage giants’ regulator.
Short sales and deeds-in-lieu of foreclosure were up 23 percent from a year ago, totaling 37,966 for the third quarter, FHFA reports.
http://realtormag.realtor.org/daily-news/2013/01/08/short-sales-hit...
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Permalink Reply by Nancy Green on
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In my experience, Fannie, Freddie, and Investors, are denying short sales in preference of deeds in lieu, and foreclosure. While the typical scenarios of rejecting short sale offers in favor of foreclosure to sell same property 6 months to 2 years later for substantially less money, do not make sense to us, there has to be great benefits the lenders are realizing at our and the publics expense.
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Permalink Reply by Platinum Worldwide Realty, LLC on
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Hi Nancy, I have to agree that in some cases that certainly seems to be the case. I suppose that there must be a reason why they have to offer or appear to be willing to help borrows to short sell but we have definitely experienced several situations where they basically stalled the short sale approval after having complied with every requirement until they let us know that it was too late to short sell and we had to talk to the legal department because we were within 30 days of the judicial sale. Of course, they are the ones that decided to set the judicial sale date. In the cases where we had a seller that could afford the legal fees to file a motion, they got a second chance at the short sale. But for those that could not, their property was sold at auction.
Even the judge here at the Miami-Dade court has changed the way he handles motions to postpone sale dates for some reason. He used to be the one we could appeal to by showing him that we had complied with every request for documentation and the borrower had been cooperating bu the lender was stalling to burn up the time. The judge would usually grant the borrower three or four months in those cases to complete the short sale and would admonish the bank's attorneys to cooperate with the borrower. That is no longer the case. For some reason, he has changed his approach completely. Even motions filed by attorneys may be dismissed by the judge who seems to have decided that he needs to send the properties to the auction block no matter what.
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Permalink Reply by Edwin Baloloy on
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RE: "great benefits the lenders are realizing"
You have to wonder if the higher powers at FNMA are finally responding to all the recent gambits a homeowner can use to increase their "rent free" time. You have to admit that tons of legislation ($25B settlement, Homeowners Bill of Rights, moratoriums, etc) have made it difficult for a beni to simply carry out collecting their collateral that was supposed to be theirs upon default.
I'm sure many of us have witnessed many short sale "listings" that were simply an attempt to stall foreclosure. Many of them have the same symptoms: no-name Realtor, no sign, no lockbox, no showings allowed, and over 200 days on the market with no description and 1 photo.
In 2008-09, the flavor of the month was the upfront fee loan mod game. Picking up steam in 2011 was the BK & stall game.
Of course, all of this punishes the homeowner who is simply trying to be proactive and SETTLE their debt. I had a bad feeling that all of the public outcry on "protecting the homeowner" would leave investors no choice by to not participate in foreclosure alternatives at all.
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Permalink Reply by Patti Omalley on
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Hi Ken, I hope some thing gives here, I am in Kendal county IL and the values are insane that are coming in from Fannie Mae.. The bank value is 20-30k less then what Fannie wants. Its a huge problem!!!
Thanks Patti O
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Permalink Reply by Jim McCormack on
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I have not seen where submitting sale comps, a listing agent prepared BPO, etc. with the initial short sale package has helped at all with getting Tuvalu correct. Unless the services asks for such data it is ignored since their servicing guidelines require ordering a a BPO or appraisal (depending on the loan investor, insurer, guarantor, etc.). I have had recent success disputing a Fannie Mae valuation, but since their valuation is coming in so high (like 80%+ more than market value), even a 20% reduction in the value post dispute is not enough to make the property salable. Please comment if you have had different results.
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I agree; however, I have had success with FHLMC; in November we were successful in a FMV dispute with Chase... sometimes, rarely though, persistence can result in holding your ground, especially when all things are in balance.
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Permalink Reply by Douglas Juenke on
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Jim, correct your are. Since we have to upload so much just to get a deal going anyway to just send in pre-emptive stuff is adding to the workload and they will not use it unless they specifically ask for it. I was the agent that said fannie is not allowing for valuation disputes because that was verbatim what a negotiator told us on a file with wells. So if they are allowing for disputes they should make sure that the servicers know about it. This lady was adamant that there was a new directive from fannie to (at least wells) that said no more value disputes so if fannie is saying that is not true.......?? well we all know that our government and their entities are honest?? There is no reason that short sales should be this hard after this many years. It is 100% cut and dried, under most circumstances the short sale nets a higher amount for the investor, keeps the neighborhood values higher and does less overall damage to the borrowers credit thereby alloting for a quicker return to home ownership and new loans down the road, BUT NOOOOOOO, these folks cannot get it together and we get to continue to work in the dark as the switch goes on and off just as we get ourselves oriented. I know we keep saying these things are getting easier but I am not sure if that is not just wishful thinking on our part to offset the insanity of this job!!!!!!
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Hi Douglas. Thank you for the reply. Fannie Mae definitely will review a valuation dispute at their valuation desk. What I believe has changed is the process of valuation. Fannie Mae appears to be taking a more activist stance in the valuation process. In the past I think FNMA would just rubber stamp the servicer's BPO's. More recently I think FNMA has been overriding the servicer's BPO's and coming up with absurd valuations. You have to keep in mind that there are other parties involved in short sales. For example, while a short sale offer may net more than a foreclosure based solely on the sale proceeds, when mortgage insurance is involved, the mortgage insurer may be offering the loan investor a much larger payout on the insurance claim on a foreclosure than a short sale. Therefore, when adding that insurance payout back to the sale proceeds many times the foreclosure is more lucrative for the loan investor. I have noticed that this is particularly true when the borrower has missed 12+ payments due to all the accrued interest, etc. I believe it will be harder and harder to get short sales approved for such seriously delinquent borrowers. That is why I always recommend sellers move forward with a short sale as soon as they know they will miss a payment. The problem, of course, is home owner delusion combined with servicers offering phony loan mods that take many months for the application and review process only to be declined after the borrower has missed many payments which brings me back to the seriously delinquent problem. I can to this conclusion when dealing with a recent short sale where the value was 80% higher than a contract I had approved 12 months ago which did not close due to a last minute title issue. After pushing the servicer's 3rd party short sale processing company about the absurd valuation which was also 80%+ more than the recent BPO the manager intervened and admitted that Fannie Mae's valuations process is no longer dictated by market value, but rather the total loss. He even commented that the borrower is 22 months delinquent when he said that. While the total loss was always part of the Fannie Mae valuation process I think they are falling back on this more now.
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Hi Jim, you pretty much have hit it on the nail head...! Fannie & Freddie are doing their best to create a new inflated market which suites their goals... maximum return to the investor...!
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Thank you for the valuable information. Is there any way to discover if PMI is on the loan, and if so, what the lender's net looks like with it? It seems this insurance is the key to why many foreclosures are taking place over short sales, we need more transparency in this process.
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