Foreclosure in Jacksonville>Question Details

Mme_mcguire, Home Buyer in Jacksonville, FL

Should we wait out this Fannie Mae foreclosure freeze?

Asked by Mme_mcguire, Jacksonville, FL Sun Oct 10, 2010

We fell in love with a Fannie Mae foreclosure condo in Jax. Our bid was accepted the first week of August. Our loan officer & agent told us we would close quickly. It took weeks to find out out that neither of them had any experience in this type of property. I posted to different websites & we were advised by multiple Realtors that Fannie Mae properties can take 8-10 weeks, & if it was a good deal to stick it out. We were cleared for closing in late September, & everything was sent back to Fannie Mae to be finalized. We were waiting on one last signature, & were told that they would have it done the first week of October. So, we moved out of our rental (our lease was up, but we could have signed for another month) & into a weekly hotel, thinking we would be closing in a few days. Then we found out that all Fannie Mae foreclosure sales had been frozen & it could take 60-90 days. We are beyond frustrated! I can't find any info in the news & we don't know what to do. Any advice?

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I have listed and sold Fannie Mae homes and this is my experience. Fannie Mae takes a deed in lieu of foreclosure and gives the listing agent 90 days to sell the house or the commission on the listing side is reduced from 3$ to 1%. The original bank holds the paper and Fannie Mae is trying to sell it on their behalf. Fannie Mae sometimes offers "keys for cash" bonus to the owner to vacate the premises and trah out ready for market. Fannie Mae also has cash credit for buyers of 3-5% for owner occupied homes and in my area a 2 year home warranty. Fannie Mae also fixes up properties to market them better and make necessary repairs. I love REO's! Way better than short sale homes.

The current freeze is for those banks that are suspected of rushing foreclosures through the process. There is a 90 day redemption period before the listing is activated so that the owner has every opportunity to get current and keep the house. Often the seller abandons the home prior to the expiration of redemption and the house sits there until a judge OK's the sale of the property.

As I mentioned, Fannie Mae only a deed in lieu and title work can be tricky. The good news is if it does close you get a clear title. If this condo is really nice, and many of them are, stick with the unit. You are in first position and unless you find something better it might be worth the pain. It is unlikely that the owner will come with the resources to reclaim that place and avoid foreclosure. Also, have an agent print out the full agent MLS sheet, I bet there is some info in the agent remarks section that might be helpful. I suggest conference calling the listing agent with your agent so you get the info first hand.

If you want more info, I have a blog comparing short sales to bank owned REO's. Click on my name and view my blog. If you like it please comment and if you found my answer helpful please check the "best answer" button on this page.

Thanks for reading best of luck!
2 votes Thank Flag Link Mon Oct 11, 2010
This foreclosure stall caught everyone by surprise. If you really like the condo there's no harm in holding onto the contract.

While you're waiting for things to clear up start looking for choice #2...you may find something you like better at a comparative price. For condos in Jax prices will remain stable or fall a bit over the next 9 months, and since buyer activity will decrease month-by-month through December as people get ready for the holidays, you won't have much competition and you won't lose on price.

Whatever you do, don't go with that loser below who is obviously trying to poach your business...picking someone out of the phone book would be better.
3 votes Thank Flag Link Mon Oct 11, 2010
You need to find a good, competent Realtor in Jacksonville.

Unfortunately, you've been receiving a lot of bad advice, and you've been basing your decisions (such as moving out of your rental and into a weekly hotel) on it.

My gut reaction--and I know nothing about Jacksonville although the advice from those in Jacksonville supports my initial instinct--is to cut your losses and move on. If it's a short sale, it could drag on and on. And if it's truly a foreclosure, even though the freeze is on new foreclosures, I expect everything to grind to a halt.

Why?

Because a lot of title insurance companies out there have already insured a lot of bad titles. Some are now refusing to insure any titles that might be bad. So even if the house has already gone through foreclosure and is back on the market, it's likely to become near-impossible to get title insurance (and thus financing) on the property.

Again: Cut your losses and move on. And find a competent Realtor in your area.

Good luck.
2 votes Thank Flag Link Sun Oct 10, 2010
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
I have 2 clients in your exact situation. We have been told that the companies that processed the original foreclosure are being audited for forging documents. It is not the banks alone it is the Foreclosure Attorney's and Title companies as well. There is a major firm in South Florida that processed a lot of the foreclosures for Fannie Mae, GMAC, BOA and others that is involved. They are being investigated and until the process is completed they are not allowed to close on any homes. Fannie Mae is not the only seller involved. I have one with GMAC that is also involved in this. Patience and trust that your realtor is doing everything in thier power to make sure you close as soon as the audit is completed. Unfortunatley it is the sacrifice and stress of buying Foreclosures to get a great deal.

We are actually seeing better deals with new construction. We wish you the best and hopefully it will not take too long for them to figure this out and you get to close soon.
1 vote Thank Flag Link Thu Oct 28, 2010
I didn't know how else to update my question other than posting here.
To answer your question John, we are still in a hotel waiting. Our loan is through Chase, and to the best of my knowledge, they have not lifted the freeze. I was in touch with my Realtor and the listing agent a couple of weeks ago, and there is nothing new. The natives are getting restless, but we're hanging in there.
I haven't really seen any news on this foreclosure freeze. The last news I saw was on PBS Newshour, and they stated that the courts were still trying to work everything out, and that the White House was encouraging the banks to lift the freeze and continue with foreclosure sales.
To address some questions and statements in various answers I received, here is some info...
This property is not a short sale. We did ask the listing agent if a month to month lease would be possible, but they were not willing to do that.
For now, we plan to wait through the end of the year. If we aren't seeing anything promising, we will more than likely move on.
Thanks for all the answers and insight.
0 votes Thank Flag Link Wed Nov 24, 2010
Mme,

How did this all work out? Hope in the past month you closed please post update.
0 votes Thank Flag Link Wed Nov 24, 2010
Fnma is offering a month to month lease until closing, you should contact the listing agent.
0 votes Thank Flag Link Tue Nov 9, 2010
I would move on and search for another property while you are waiting. Unfortunately even if a title insurance company issued a policy, it could come back to bite you if the previous owner objects to the sale and gets the property back. I'm not sure how it would play out if you made expensive upgrades... would you get that money back?
0 votes Thank Flag Link Thu Oct 28, 2010
After reading your comment, I am not sure if your purchase is a Fannie Mae Foreclosure or Shrot Sale. If it is a Fannie Mae Real Estate Owned (REO) property, it has already been through the foreclosure process and the foreclosure freeze would not apply. If it is a Fannie Mae Short Sale, agents that are not experienced can create delays due to submitting paperwork that is not complete or not submitting the paperwork in a timely manner. There also may be a 2nd loan that needs to be approved.

In any case, if you got a good price and the condo meets your needs, it may be a good idea to stay with it for a while longer to see if the issues can be resolved.

Best Of Luck,
Harold Avent, CRS, CDPE, e-PRO
Broker Associate
REMAX Execs
harold@haroldavent.com
Web Reference: http://www.haroldavent.com
0 votes Thank Flag Link Fri Oct 15, 2010
Mme_mcguire,

There is some great information in the answers below, but I would weigh in with this point that John Walin also mentioned.

The moratorium on foreclosures is only certain banks, not Fannie Mae. Bank of America, GMAC and Chase have halted foreclosures in at least 23 states, including Florida. These are the 'judicial' states. Bank of America has extended its moratorium to all 50 states, but the other two have not.

Find out the bank for your Fannie Mae foreclosure and you will have your answer as to whether your wait will be weeks or months.

Even if it is one of the banks that have halted their foreclosure sales, if the condo is a great deal and you love it and you can endure the weekly hotel, eventually this will work its way through.

Bottom line is that the former owners likely didn't pay their mortgage and the bank had the right to foreclose, even the ones who were sloppy with the paperwork. It is a technicality that will be cleared up.

What is your legal time frame for waiting? Your contract should have a closing date. If you are really frustrated and want to start looking again with your agent, then find out when the closing date is. If you go beyond that, you are out of contract and can have your binder returned. Then you are free to write a contract on another place.

Hope this answer was helpful to you. We hope everything works out so you can buy your condo.

Best regards,

Sharon Alters, CDPE, GRI
Coldwell Banker Vanguard Realty
Web Reference: http://teamalters.com
0 votes Thank Flag Link Thu Oct 14, 2010
Call the listing agent and ask for an update. Also, you can try to call the lender and see what information they can give you.
0 votes Thank Flag Link Thu Oct 14, 2010
Sorry just read my posting and needed to finish 2nd sentence...

Fannie Mae takes a deed in lieu of foreclosure and gives the listing agent 90 days to sell the house or the commission on the listing side is reduced from 3$ to 1% if it goes to auction at the 90 day mark.
0 votes Thank Flag Link Mon Oct 11, 2010
The biggest issue with the delay should be with only certain banks. It may depend on which lender had the original loan. Fannie Mae may be able to bring this to a close sooner than you think but you need someone who understands the process to work it through. You have a couple of problems. The bigger problem can be that it is very difficult to get out of the relationship you currently have with the two Realtors involved (yours and the listing agent). If another Realtor helps you get this resolved and wants a commission, then you will have several competing for a slice of the pie. Your current agent will claim to be the "procuring cause" which is a very significant claim. Someone would have to show that the agent really fouled the deal up.

The best thing you can do is look for another property. It's certainly not a pleasant choice to start over, especially when you are in a weekly hotel. Due to that fact you need to make a quick decision. The right Realtor can work to find homes at excellent prices that meet your requirements and that could close quickly, especially since you have been approved for a loan.

I have over 20 years experience in the Jacksonville market and my real estate partner, my wife, has 20 years experience as manager of a real estate closing department for a major law firm. Between us we can get you to the right property and get you closed with NO RISK.

Give me a call if we can assist you thru this difficult issue.

Jerry Sachs
Coldwell Banker Vanguard Realty
904-477-4622
0 votes Thank Flag Link Sun Oct 10, 2010
Just posted a similar answer on another site for you. This foreclosure situation could take quite awhile to sort out. Judges are reversing some foreclosures even though title has changed hands due to the banks not paying attention. With the abundance of available properties in the Jacksonville area where I have been an agent for the past 12 years there has to be another property that you can fall in love with. You should detach yourself, find an agent that is well qualified, and see how fast you can close. This is costing you money, emotional stress and heartache. I can be reached on my cell until 7 PM at 571-1358 or email me at yourrealtor@att.net . Let's see if we can find a house you can call home.
All the best
Charlie
Charlie Chorman - REALTOR
Coldwell Banker Vanguard Realty
904-571-1358
yourrealtorj@att.net
Web Reference: http://jaxhomesinfo.com
0 votes Thank Flag Link Sun Oct 10, 2010
If it is with a Bank that is checking their paper work regarding foreclosures - FORGETABOUTIT! Move on but remember it will take even longer to get your deposit back..... So if you don't want to wait for your deposit return then you might as well hang in there. It is gonna take at least 30days to close on anything else.
0 votes Thank Flag Link Sun Oct 10, 2010
Bank owned properties are having difficulty getting Title Insurance so we will probably see a halt on the closing of REOs that were "serviced" by these offening banks.
0 votes Thank Flag Link Sun Oct 10, 2010
The freeze is not in the sale of a bank owned properties it is the process of foreclosing on defaulted mortgages.
Is this property bank owned? If it is I would press forward there is no excuse for Fannie to hold back from closing.
0 votes Thank Flag Link Sun Oct 10, 2010
WOW~ you were one of the unfortunate to get stalled in your purchase. I would wait it out and the benefit of doing so will assure you that your paperwork and deed are in order. It is worth waiting for!

Debbie Albert
Web Reference: http://www.ronanddebbie.net
0 votes Thank Flag Link Sun Oct 10, 2010
If this is a short sale, you may close quicker. There is a big incentive to allow short sales because the lender doesn't take ownership and the title insurance policy is no problem.

Verify exactly if this is a short sale or Fannie Mae owned. Your agent should know the difference. If not, well, that is a serious problem.
0 votes Thank Flag Link Sun Oct 10, 2010
Wow, sorry to hear you have to go through this!

It may be longer than 90 days... Certain "servicers" for Fannie Mae, Bank of America, JP Morgan Chase, GMAC (now called Ally) and a few others are suspected of "robo" signing on foreclosure documents. Because of this it is difficult if not impossible to obtain a title insurance policy. The Title Insurance companies are not insuring the title on those properties foreclosed on by these "servicers".

You may be looking at 6 months before the "servicer" for Fannie Mae tries to locate the original mortgage documents so they can provide a true attestation that they have reviewed the documents.

Find a month-to-month rental and keep looking or another property in the meantime while you're waiting for this to close.
0 votes Thank Flag Link Sun Oct 10, 2010
You're calling it a Fannie Mae foreclosure but from what I'm reading in your question, it sounds like it's a Fannie Mae short sale. If that's the case, I can understand that it's taking a long time for an approval. Fannie Mae foreclosures have already been foreclosed and are back on the market to be sold. These normally get approval within 1 to 2 weeks. If your agent isn't qualified or experienced in working short sales, it may be part of the problem. However, if it's a foreclosed property, it doesn't make sense. Find out what, specifically, you're dealing with. It should have been fully explained to you by your agent. Then find a qualified agent to help you but make sure that you're not contractually bound not to persue this property through a different agent or you may owe commissions to your original agent.
0 votes Thank Flag Link Sun Oct 10, 2010
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