Home Buying in New York>Question Details

SBNY94, Home Buyer in New York, NY

Suing Fannie Mae for failing a contract?

Asked by SBNY94, New York, NY Fri Jan 18, 2013

Does anyone know a buyer who had sued Fannie Mae for non compliance on a sales contract and what the results were? Was anyone successful and how long does it take? I mentioned in a previous post that I have been in Contract with Fannie Mae for 5 months with no closing date in sight... because they are never ready to pay the flip tap. Please let me know if you do know someone. Thank you.

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Answers

10
I noticed your other questions were about financing in HDFC buildings and that you bought an HDFC coop owned by Fannie Mae?

It sounds like you bought a foreclosure or possibly short sale. A "flip tax" is a private transfer fee. It is considered a restrictive covenant. Certain lenders will not lend in buildings with restrictive covenants. That is why FHA does not loan in any coops. "Board approval" is also a restrictive covenant. Even most Manhattan condos have a restrictive covenant "right of first refusal" many lenders do not want to loan on properties with restrictive covenants.

In fact, if it wasn't for REBNY (real estate board of NY) lobbying efforts no FHFA (Fannie Mae) lender would loan in any building with a flip tax.

http://nycblogestate.com/2011/02/rebny-succeeds-in-flip-tax-…

http://nycblogestate.com/2010/09/fannie-mae-flip-tax-propose…

http://nycblogestate.com/2011/10/restrictive-covenant-right-…

In HDFC buildings the amount of "flip tax" is usually based on profit. If there is such a high profit it doesn't make sense that it ended up owned by bank. The coop has the first lien and in a coop only the board can initiate as foreclosure. Although a "flip tax" is usually the burden of seller in a foreclosure or short sale, the buyer is getting a great deal they usually need to come up with additional cash at the closing. In NY the onus is on the buyer to do do diligence before signing a contract.

I hope you had a NYC coop attorney advice you of possible risks before you signed a contract on a bank owned property in an HDFC coop.
2 votes Thank Flag Link Fri Jan 18, 2013
I figured the flip tax was due from an original owner that paid $250. I'm surprised that he got a home equity loan on an HDFC coop. They're hard to get in most coops. It must have been either Chase or Citi. The reason they are so hard to get is because the bank is usually the third lien holder. In this case they should still be second to the the coop corporation. The flip tax is levied against seller but what surprises me in your situation is that the coop transferred the shares to the bank without getting their flip tax when they transferred shares to bank. The bank never should have been able to get the shares without paying the back maintenance. Unfortunately most HDFC coop boards are very unsophisticated and in my opinion they are responsible. They want their flip tax now but they should have thought about that when they transferred shares in the corporation to a bank. The bank should have been paying the maintenance all along. I hope it works out and you got a great deal
Flag Sat Jan 19, 2013
It is indeed a HDFC foreclosed apt and the owner is Fannie Mae... The flip tax is huge because the previous owner paid only 250 dollars for it and lost it on an Equity loan to buy another home. He couldn't keep up with both. I am all set on my side... just waiting for a closing date from Fannie Mae which in 5 months never gets confirmed because they cannot come up with the flip tax and the maintenance of 13 months they owe no matter what.
Flag Fri Jan 18, 2013
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
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What was the outcome of your dealing with Fannie Mae ?
0 votes Thank Flag Link Fri May 20, 2016
I am in the same situation and I need advise because they are doing the same thing to me , they sent me a letter to terminate the contract with no reason and we almost closing . And i decided not to sign
0 votes Thank Flag Link Thu Jul 30, 2015
Why did they want to terminate your contract?
Flag Fri May 20, 2016
I would really like to know the answer for your question; three days before closing I was asked to sign termination, but I refused because i had already paid the lawyer and for the appraisal; they have my deposit of $5,000.
0 votes Thank Flag Link Sat Dec 13, 2014
Can u sue if the well is contaminated?
0 votes Thank Flag Link Sat Nov 23, 2013
My wife and I are currently contemplating a suit against Fannie Mae. I have been in contract since July and closing was scheduled for August. We have always been ready and willing to close. They refuse to close and now have relisted the property for more than my contract was for. I would be very interested in a class action against them as all I keep hearing is that you can't do anything.
0 votes Thank Flag Link Fri Oct 25, 2013
I too was in contract with Fannie Mae and the day it was supposed to close (money was transferred) they asked for an extension, then two more and finally sent me a termination letter which I refused to sign. I even proposed that I pay additional money for the second TD that they were unable to clear. It has been two years with my down payment in escrow and FM just reopened the property for auction and sold to another bidder. I have spent several thousand dollars getting the well, septic and plans checked and on legal advice which amounted to tough luck.
I will gladly join a law suit against FM.
Roger,Home Buyer, Bishop, CA
Flag Wed Feb 3, 2016
I was in the process of purchasing a house in Richmond RI. The house is owned by Fannie Mae. Throughout the process that began on Jan 29th 2013 it has been a rough ride. Randall Realty is the selling agent. They have messed things up during this process so many time that it delayed the closing multiple times. Towards the end of this “deal” I had a closing date of July 17th 2013. In June after talking to my realtor he said this is the last extension and we will have a closing on the 17th. I asked should I now put in my notice with my landlord, and he said definitely. In june we sent a letter to Randall (commitment letter from bank) stating what needed to be done from our appraiser. Simply paint front deck (10x5), clean out gutters, and fix 3 fascia boards. This could have been done in about 3 to 5 hours max. We also had installed a new septic but they didn’t connect the drains to it either. That needed to get done for my appraiser to come back and check. So since June and sending them this letter ( which they did not read the items to be completed) not 1 person did repairs. So they sent an extension until the 31st of July. I told them we need this done ASAP due to me leaving my apartment by the 1st. On July 25th someone broke into the house stealing the copper propane line and oil tank line. Upon this happening it flooded 100 gallons of heating oil into the basement running into the ground. Randall called the fire dept. and they put speedy dry down. DEM was called by one of the individuals from Randall to find out if they would be in trouble for the release of oil into the ground with possible well contamination. While talking to DEM they got nervous and hung up. Randall assured me they would take care of this and sent an extension on July 31st for no later than August 31st closing. On August 1st they sent a termination letter. So now I could not get an extension with my landlord and had to put everything I own into a storage unit and we are HOMELESS. On top of it still to this day no one person has gone to clean up the oil spill and the neighbors’ water supply can become contaminated. They water table in this area is high. DEM cannot make them clean it up until it gets into the well system, but at that time it will be too late. As for me now I have lost my place to live, my money invested as a first time homebuyer, and all respect for Fannie Mae. The people need to know how bad Fannie Mae is in dealing with our housing problem in America. A DEM officer I talked to told me they are the worst of all and don’t take actions on helping to the resolution of problems.
0 votes Thank Flag Link Sun Aug 4, 2013
I tried to purchase a fannie mae home for 7 months. I have had an experience that would blow everyone's mind. I spent a fortune trying to buy this house. I would like to sue for all the money I spent trying to purchase this house as well as all the rental expenses I incurred while having to rent waiting to close. Just when we were at the end and all we needed was an extention for the appraisal the fannie mae agent, Kelvin zalaya, the fannie mae guy refused to entend. After waiting on him for 7 months I couldnt believe he would be so cruel. I am heart broken over loosing my dream home and in shock that after waiting on him for so long he would do this to a perfect credit buyer. I think we need to all get together as a group and sue fannie mae as a class action. Anyone who wants to visit about their experience should give me a shout. Pamala Walls, Pamala4@aol.com, 512-921-0351. What fannie mae is doing with our tax dollars and all the horrible unfairness needs to stop. We are paying these people to take advantage of us and act in an infair, dishonorable and illegal way.
0 votes Thank Flag Link Sat Jul 20, 2013
I have been trying to close on my home since April 28th. They continued to move my closing date further back. They finally told me we would close on May 9th. So I broke my lease at my apartment and my last day was scheduled for May 31st. My apartment already had my apartment leased out so there was no turning back. Well May 31st came and went. I had to leave my apartment and move all of my things out into my mothers house because we are still waiting for Fannie Mae to approve putting in a freaking fuse box for an AC. Henry Mcfadden, the selling agent for Fannie Mae told me it only takes 3-4 days for an approval... I've been waiting two weeks. I've called Fannie Mae twice with no return phone call.
Flag Thu Jun 5, 2014
Pamala, I had almost the same exact experience with Kelvin Zelaya. We were ready to close, had 2 storage units full of furniture that we had purchased and excited to close and move in; however, the appraiser was incompetent (he provided "no comps" for the property and there were plenty). Therefore, we needed a two week extension to get another appraisal from a different appraiser. Kelvin would not grant the extension in writing which, as a business person, I became very uncomfortable. Thus, we had to terminate our contract with Fannie Mae to keep from losing our significant amount of earnest money. We terminated on the basis of loan approval because the bank would not approve a loan on an unqualified appraisal. We quickly resubmitted an offer on the same property. Kelvin's reply was "Offer rejected ... Material breach and non performance of previous offer and previous experience of non performance from this buyer." Our offer was the same as our original offer. In no way did we deserve such commentary.

This was the first time we had ever worked with him and will be the last. We had done everything he had asked and more. Our credit scores are 780 to 800. We simply needed another appraisal. I have spoken with several people that believe Kelvin is seriously unprofessional. We also had the Fannie Mae listing agent call and email Kelvin and his supervisor. NO RESPONSE OR RETURN CALL!!! The last time I checked, Fannie Mae had 455 foreclosures in Colorado alone. You would think that Fannie Mae would want to get these properties sold? Furthermore, the people I have spoken with say that he has done this plenty of times to others, he does NOT ensure that bills for property upkeep are paid, and there are more appropriate terms than "unprofessional" that refer to Kelvin.

I agree with you Pamala about our tax dollars at work. If I did anything close to what he is doing to people in my line of work, you better believe I would be looking for another job. Kelvin's email address is kelvin_zelaya@fanniemae.com

Again, there are currently 455 foreclosures in Colorado alone.

I am sure that we are but a few of many that he has treated this way. I will start my fight by contacting the directors at Fannie Mae.
Flag Tue Dec 24, 2013
Not sure you have your facts straight. Why would FNMA be expected to pay your flip tax? Also, you likely are doing business with a bank, not directly with FNMA. The underwriters for the bank are the ones who call the shots. FNMA simply supports the loan once it's issued by the bank. No one is guaranteed a loan. It's a process. Sometimes they don't go through. It's entirely up to the underwriters.
0 votes Thank Flag Link Fri Jan 18, 2013
You are the one without facts straight. Fannie Mae is the entity that we sign a real estate contract with.
Flag Tue Dec 24, 2013
I was purchasing a property for cash, No mortgage. There was a condo association lien that they were responsible for paying. They dragged their feet paying it and claimed it was a cloud on title. Now they are terminating the contract saying we are past the closing date which was totally their fault.
Flag Fri Oct 25, 2013
I think you don't understand the issue: I signed my contract 5 months ago and dealing with them for 5 months now to obtain a closing date. I am talking about a flip tax that Fannie Mae (as an owner) owes to the Coop at the closing. They do not seems to get the clearance for that flip tax... so we cannot close.
Flag Fri Jan 18, 2013
Are you sure that it is FANNIE MAE that you are in Contract with?
Not some Bank?

In either case; you probably can't sue them:
I am not a Lawyer, and I do not dispense legal advice,
But I believe that in order to sue somebody, you need to show a LOSS.
Being deprived of the house, is not a loss.
You have not suffered a financial loss; have you?
0 votes Thank Flag Link Fri Jan 18, 2013
Refer to Section 17-19 of Fannie Mae sales addendum specifically stating that buyer is waiving the right to sue for specific performance and will be subject to pay Seller's legal fees as well as a $5000 penalty for Breach of Section 17.

AS A MATERIAL PART OF THE CONSIDERATION TO BE RECEIVED BY THE SELLER UNDER THIS
AGREEMENT AS NEGOTIATED AND AGREED TO BY THE PURCHASER AND THE SELLER, THE PURCHASER
WAIVES THE FOLLOWING:
(A) ALL RIGHTS TO FILE AND MAINTAIN AN ACTION AGAINST THE SELLER FOR SPECIFIC
PERFORMANCE
References to the “Seller” in this Section 17 of this Addendum shall include the Seller and the Seller’s servicers, representatives,
agents, brokers, employees, and/or assigns.
In the event that the Purchaser breaches any of the terms described or contemplated under this Section 17 of this Addendum, the
Purchaser shall pay all reasonable attorney fees and costs incurred by the Seller in defending such action, and the Purchaser shall
pay Five Thousand Dollars ($5,000) as liquidat
Flag Fri Oct 2, 2015
A wronged buyer can sue for "specific performance" because real estate is considered unique & under most state's std purchase and sale agreement for real estate, the winning party can be awarded attys' fees, costs and actual damages. My question is whether anyone has done this with Fannie Mae? I have a cash purchase on a Fannie Mae owned condo, which Fannie Mae has owned for 2 yrs now. Fannie Mae has asked for 2 extensions because of HOA fines levied against the prior owners which of course are clouding the title. They've now asked for a 3rd extension of time but I know for a fact that during the prior extensions, they took no action in regard to investigating the HOA lien . . . they didn't talk to anyone on the HOA board or to the HOA's attorney. They did nothing! Yet they've have many thousands of my deposit money "in escrow" for all this time. It really does seem like they do not want to sell the property!
Flag Wed Sep 16, 2015
I have suffered a substantial loss because the fannie mae agent, Kelvin Zelaya, would not act in time and became angry when I inlisted the help of my congressman and senators. I spent 7 months trying to purchase the same house.
Flag Sat Jul 20, 2013
I am buying or "trying to buy" a foreclosure owned by Fannie Mae... My Mortgage is from my own bank. As of Monday, I have a loss, yes... daily Penalties.
Flag Fri Jan 18, 2013
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