What company do you think of when we say "evil company"? Big oil? Big tobacco?
We think Fannie Mae.
Some would say that Fannie Mae was the biggest contributor to the mortgage crisis. Fannie Mae's awful business practices led to their collapse and subsequent government bail-out that is estimated to cost tax payers $224â€“360 billion in total to "right the ship".
It was after this guarantee of survivorship, and amidst of a fragile attempt at a housing recovery, that Fannie Mae became the most difficult, and EVIL investor of them all. Doesn't seem right that they were the problem, our tax dollars were and are the solution, and yet they would still adopt tactics that make them the most likely of all investors to take a property to foreclosure.
What specifically have they done? Here's the breakdown:
1) In 2010, they changed their in-house modification program to a floor rate of 5%, when it had previously 2%. This became known as the "worst modification" offered by any investor, with the only exception being investors who didn't do mods at all. Part of this change was the possible deferment of principle, but the modification model became largely driven by the VALUE of the property instead of the homeowner's hardship or ability to pay on a modified payment.
2) In 2009, they changed their guidelines for foreclosure postponement stating that only a property in an active and APPROVED workout (modification or short sale) would get the sale date postponed. Almost every other investor would postpone a sale date to allow time for a review to be completed, but Fannie needed the hard letter in hand, effectively doubling the number of Fannie Mae foreclosures.
3) In 2010, they cut the amount they would pay to 2nd lien holders through a short sale. Fannie Mae was now among a small handful with an amount to 2nd lien holders less than the HAFA amount.
4) Also in 2012, they told servicers to counter a short sale for MORE than it was worth.Once a BPO was received, the servicers were given a "reconciled market value" that they should counter the agent at. This "RMV" was a percentage OVER THE VALUE . Fannie Mae became the only investor countering above fair market.
5) More in 2012, Fannie Mae changed their value dispute process. The new dispute process had a less than 5% effective rate for agents disputing a value on file, even if all documents supporting the value the agent was contending. Even a full appraisal by a licensed appraiser would no longer be enough to get Fannie Mae to see eye to eye on value.
6) In 2013, Fannie Mae declared that all BPOs would be ordered by them and then reviewed by them. The order process can take up to 5 business days and the review process (before they will release the BPO value and the RMV value to the servicer) can take 10 business days. The new value process can take three weeks, which will slow down short sale approvals, and increase the number of "unapproved" short sales that go to foreclosure.
How can this be? How can Fannie block the assisstance they have promised to offer to receive the bail out money in the first place? How can they price drive by demanding more than fair market value for houses and expect no one to notice that they are creating a new bubble to burst later down the road? How can they continue to "tighten the reigns" making guidelines more and more impossible to adhere to so delinquent Fannie Mae borrowers are practically screwed out the gate?
How can they do this all on our dime?
It is time to say, 'NO MORE!' to Fannie Mae taking homes and listings. The foreclosed home getting held in Fannie Mae REO portfolios get released to market once a short sale buyer has been "suckered" into paying over market value for a home, so that Fannie Mae makes more money on both short sales and REOs. The home owner and the real estate agent are the ones who suffer.
Contact the US Treasury and tell them what you think about this and about Fannie Mae!
Department of the Treasury
We're fighting the good fight for our sellers and agents every day- with Fannie Mae and every investor. Fight with us against Fannie Mae. Keep the listings that are YOURS and don't let Fannie Mae take them from you.
Contact Short Sale Solutions for more information.