Los Angeles Short Sale: Are The Banks Lying to Uncle Sam?

Los Angeles CA – I recently received an e-mail from another real estate agent. They were asking for our advice on a short sale.

They accused a large, national lender (one of the 4 largest in America) of lying to Fannie Mae. Fannie Mae is almost a subsidiary of the Federal Government


Here was the e-mail they sent us. ” The lender told the seller that they had to agree to a deficiency or the short sale would not be approved.

The seller said that was unacceptable. They told us they wouldn’t go thru with the short sale unless the deficiency was waived. We notified the short sale negotiator and he sent us a short sale decline letter.

The decline letter says buyer walked. That was a total lie! It appears that this lender told the owner of the loan, Fannie Mae, that the buyer walked when that was not the case.

But, he told us that Fannie Mae was making them do it. I think they are showing this to Fannie Mae to cover their butts! Steve.”

Our comments on this. This is a big deal. That lender’s legal obligation is to do what is best for Fannie Mae. Short sales usually reduce a lender’s losses by 20%, thereby netting Fannie Mae more money.

For this lender to do this is a blatant violation of their legal obligation. Fannie Mae’s policy is to not pursue short sale deficiencies. They just write off the loss and move on. We have sold many short sales where Fannie Mae waived their deficiency rights.

I think the short sale negotiator’s ego is getting in the way of a deal. They are probably delegated for Fannie. This means Fannie tells them to do whatever they want on behalf of Fannie.

The person not willing to waive the deficiency is this short sale negotiator. This is pathetic and should be investigated.

There is a solution to the problem. I would recommend calling Fannie Mae directly and let them know what is going on.

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Thanks for reading this, Jennifer Escobar.


Jennifer is a Real Estate Agent at Qwest Real Estate.


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Comment by Jennifer Escobar on June 21, 2011 at 10:27am
Hey Jeff...that's great! I have done the same as you have in the past with my Fannie Mae/Freddie Mac transactions. Unfortunately, there are a lot of agents out there that really don't know what to do in these types of situations. Great JOB!
Comment by Jeff Payne on June 21, 2011 at 2:11am

Have you sent this to Fannie Mae?  I have found that if you get this to them they will respond to you.  I had an issue a few weeks ago and I blasted their CEO and BOD in an email and I got 2 phone calls the same day and my file closed without a hitch after that.

I suspect that you are correct, the servicer has the delegated authority to make the decision, but that does not mean they made the right decision. 


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