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

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Permalink Reply by Jim McCormack on January 15, 2013 at 11:20am

First ask the borrower/seller if they were paying PMI with their payment.  If not, it does not mean that mortgage insurance, loan pool insurance, interest rate default swap/insurance are not applicable to their loan.  While the servicer or investor will never give you their internal numbers, you can certainly ask them if the loan is covered by insurance.  They will usually tell you and I have even gotten them to tell me the MI company so I can contact them directly.  One short sale would not have closed due to the nitwit at the MI company who thought that the seller was not going to let the house go to foreclosure.  I called his bluff and his cash contribution demands dropped dramatically and the short sale closed.

Permalink Reply by Douglas Juenke on January 14, 2013 at 9:11am

Hi Jim,

 Thanks for the reply but as far as too many lates and difficulty I recently tried a short sale with wells with no late (both HAFA and in house) where the borrower had a job relocation over 200 miles away and had been making payments for over 2 years and both time the file was declined for not being late.  So under the advice of a lawyer they are now late so that the investor will consider even doing the short sale and that is my point. After 5 years of these things it should not be this hard.  There is no rule book and if there is a new page in inserted everyday that contradicts what was in it yesterday.  These banks should do one thing, ask us how to do it uniformly and quickly and the losses would not add up for 22 months of missed payments.  my 3 cents....

Permalink Reply by Jim McCormack on January 14, 2013 at 10:03am

HAFA requires that the borrower be at least 60 days delinquent.  The in-house program you are referring to is probably the Bank of America Coop Program.  They also require a 60 day delinquency.  Given that HAFA is all but dead overall and has been for some time for Fannie Mae and Freddie Mac loans this should not be any great loss.  Just because the lender declined the borrower for those 2 programs does not mean that you cannot submit a short sale and get it approved.  Please see the new FHFA short sale guidelines.  No delinquency is required.

Permalink Reply by Andrew Coppo on January 15, 2013 at 11:58am

Under the new servicing guidelines, Fannie Mae obtained delegations of authority so that servicers can more efficiently process short sale requests without the need to obtain mortgage insurer approval on individual mortgage loans. Although I have been unable to locate it, a list of these mortgage insurers is allegedly posted on eFannieMae.com. I would imagine Freddie Mac obtained the same delegations of authority, however, I have yet to confirm that fact. 

See page 11 here: 

https://www.fanniemae.com/content/announcement/svc1219.pdf

I hope this helps. 

Andrew Coppo

Greater Boston Short Sales, LLC 

Permalink Reply by Kevin - Greenville, SC on January 15, 2013 at 12:01pm

Servicer Delegation

Servicers have delegated authority to approve a Standard Short Sale for:

  • Borrowers who are 31 days or more delinquent.
  • Borrowers who are current or less than 31 days delinquent, provided the borrower is experiencing one of the following eligible hardships:
    • Divorce or separation
    • Death of a borrower or primary wage earner
    • Borrower or dependent family member has a long-term or permanent disability
    • Distant employment transfer or relocation, including Permanent Change of Station orders for service members

If the borrower is current or less than 31 days delinquent and their hardship is other than one of the four listed above, Servicers may submit a short sale recommendation to Freddie Mac for approval.

Borrowers must meet all eligibility requirements in order for Servicers to approve a short sale.

Mortgage Insurance (MI) Delegation

  • Servicers can approve Standard Short Sales that are completed in accordance with the Guide without obtaining pre-approval from the participating MI companies.
  • Servicers can access the list of participating MI companies in the Service Loans application by selecting “Delegated MI Companies” link in the Home tab.
  • The list will be updated from time to time if MI companies are added or removed from the list.

Other mortgage and borrower eligibility requirements apply as noted in Guide Section B65.36.

http://www.freddiemac.com/singlefamily/service/short_sales.html

Permalink Reply by Becky Martin on January 16, 2013 at 2:04am

Is this true for Fannie Mae also?

Permalink Reply by Andrew Coppo on January 16, 2013 at 4:43am

Yes, Becky. Fannie has the same guidelines. See below. 

Mortgage Insurer Approval for Standard Short Sale/HAFA II and Deed-in-Lieu of Foreclosure
Servicing Guide, Part VII, Section 604.04: Discussing the Sale With the Mortgage Insurer and Section 606: Deeds-in-Lieu of Foreclosure

As a reminder, Fannie Mae has obtained delegations of authority so that servicers can more efficiently process short sale requests without the need to obtain mortgage insurer approval on individual mortgage loans. A list of these mortgage insurers is posted on eFannieMae.com.
For mortgage insurers not on this list, servicers must continue to obtain their approval on a case-by-case basis. The servicer must not agree to a short sale or deed-in-lieu of foreclosure unless that mortgage insurer agrees 

in writing to:
 waive its property acquisition rights before the claim is filed, and
 settle the claim by paying the lesser of the full percentage options under the terms of the master
policy or the amount required to make Fannie Mae whole (the sum of the outstanding principal
balance, interest accrued at the note rate from the last paid installment date, and miscellaneous
expenses, less any cash contribution from the borrower or the property purchaser).
Servicers must comply with all obligations related to the submission of mortgage insurance claims.

https://www.fanniemae.com/content/announcement/svc1219.pdf

I hope this helps. 

Andrew Coppo 

Greater Boston Short Sales, LLC

Permalink Reply by Jeffrey Burnham on January 16, 2013 at 5:59am

So... we all recognize that Fannie wants MORE than the properties are worth.

 

How do we get this resolved?? Who do we need to bring into the fold to get Fannie to accept, at worst the appraised values?

WHY isn't there more attention being paid to this with the media?  I've seen this on multiple occassions here in Las Vegas.

Permalink Reply by Edwin Baloloy on January 16, 2013 at 7:28am

In many ways, the latest behavior from Fannie Mae isn't shocking.

 

Let see some of their recent decisions and tell me if there's an underlying message to their position on the whole housing mess:

1. FNMA creates "HARP" that seems to be the only refinance plan (along with Freddie) that is elligible to non-delinquent borrowers. Most other plans require the homeowner to have missed payments.

2. Part of the $25B settlement is to include principal reduction on certain loans. Fannie Mae refused to participate in this and called it "irresponsible" and "would not make a meaningful improvement in reducing foreclosures in a cost-effective way for taxpayers." FNMA Director Edward DeMarco also said that participating in principle foregivness "could entice underwater borrowers who are current on their mortgage to stop making their payments to become eligible, leading to further losses for the two agencies." The Treasury dept has asked DeMarco to reconsider.

http://www.chicagotribune.com/business/ct-biz-0801-fannie-freddie-2...

3. Dec 2012 - Fannie Mae withdrew from HAMP

4. Now...Is it possible Fannie Mae will no longer offer foreclosure alternatives?

 

You have to wonder: is FNMA actually making decisions on what they think is best for the market in the LONG TERM? This would be a sharp contrast to their "ride the wave" and "pass the buck" stance of the peak of the market and what partially led to the housing collapse.

Permalink Reply by Kevin - Greenville, SC on January 16, 2013 at 7:56am

I concur.  Their mandate is to cut losses their, not help Homeowner's.  If they can demonstrate their current methods are working to do this then I don't see any changes on the horizon.

Permalink Reply by Mike Linkenauger on January 17, 2013 at 7:51am

I think our Government and Fannie Mae are just attempting to control housing prices on a national level with their inflated property values! Check out this blog post I just posted on this site - www.shortsalesuperstars.com/profiles/blogs/is-fannie-mae-attempting...

Permalink Reply by Gab on January 17, 2013 at 8:12am

Buyers here. Our short sale offer is being stalled by FNM because of over evaluation (original BPO was $199k, new one is now $219k..yeah right). In the meantime I've been looking at FNM HomePath homes and ALL of them are grossly overpriced in my area.

Example here: http://www.zillow.com/homedetails/1088-Chandelle-Lake-Dr-Pensacola-...

Check the "Price History"

It was short selling for $192500 with no takers.

Then forclosed and put up for sale for $235k!

I made an offer using HomePath mortgage financing for $165k after price dropped on 01/10 and it was accepted yesterday in less than 24hours  but decided to pass (and there were other offers submitted)

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