Fannie Mae's incompetence causing more foreclosures, not lessBy William D. Tucker, III
Tucker Griffin Barnes P.C.
Tucker@TGBLaw.com
Fannie Mae as an investor owns more and more troubled loans. As the investor, Fannie Mae is “calling the shots” whether a property can be sold as a short sale or is going to foreclosure. Their public policy statement on their website states Fannie Mae is “helping families prevent foreclosures,” but recent practices in the short sale market place result in the opposite. In other words, Fannie Mae’s actual practices and guidelines submitted to their loan servicers are resulting in more foreclosures.
Here
are some recent trends observed with Fannie Mae and attempted Short Sales:
1. Fannie Mae loans are being foreclosed on much
sooner than other conventional and government loans. (For example, in the last several months, we
are aware of two Fannie Mae foreclosures in our local market where the Borrower
was only four months behind.) Most
Lenders allow a much longer delinquency period before a foreclosure.
2. Once a foreclosure is started it is practically
impossible to postpone due to recent Fannie Mae Guidelines. Most Lenders
will postpone a foreclosure to allow sufficient time to review the short sale
contract. These alleged Fannie Mae guidelines,
which are different from loan servicer to loan servicer, are outlined below:
A.
A ratified contract has to be submitted to the Short Sale Lender prior
to thirty days before a scheduled foreclosure, or
B.
The completed Short Sale Package has to be submitted to Fannie Mae
within ten days prior to the scheduled foreclosure date, or
C.
Fannie Mae has to approve the short sale within ten days (or according
to another negotiator within three business days) of the scheduled foreclosure.
3. Another important trend with Fannie Mae is
their policy of no longer releasing the deficiency for the Short Sale Seller as
part of the Short Sale approval. The
Borrower is losing their house and being forced to move as a result of their
hardship (lost job, divorce, illness, etc.)
Now with this practice, the Borrower is uncertain as to whether there
will be any future collection activities on the deficiency. Most Lenders will waive the deficiency
entirely or waive it for a minimal cash contribution.
Unofficially,
the loan servicers are saying Fannie Mae will probably not attempt to collect
the deficiency. But legally in Virginia
there is a five year statute of limitations from date of default. The Borrower has already suffered enough and
usually has no money to pay the deficiency.
In
summary, Fannie Mae needs to change their actual behind the scene practices and
guidelines. They need to adhere to their
stated policy of “helping families prevent foreclosures.” Each foreclosure that can be prevented with a
short sale is one less house to depress the local housing market.
PS—
If these trends or guidelines continue, Fannie Mae borrowers are in for a rough
time with trying to short sale their underwater properties.
PSS—And
on top of all this, taxpayer money is being used to bail out Fannie Mae. Where’s Congress when we need them? What a mess!!
William D. Tucker, III
Senior Partner
Tucker Griffin Barnes P.C.
Charlottesville, VA
434.-951-0858
Heck, after they foreclose, own the property and try to sell, Fannie Mae becomes even worse to deal with. Turning down cash offers without negotiating then coming back months later asking if your client would purchase at an even lower price (after the client has purchased another property). Very frustrating all the way around for home owners, buyers, real estate agents, attornies, lenders, etc.
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