Tucker’s Editorial: Fannie Mae’s incompetence causing more foreclosures, not less

Fannie Mae’s incompetence causing more foreclosures, not less

By William D. Tucker, III
Tucker Griffin Barnes P.C.

FannieMae asan investor owns more and more troubled loans. As the investor, Fannie Mae is “calling the shots” whether a propertycan be sold as a short sale or is going to foreclosure.  Their public policy statement on theirwebsite states Fannie Mae is “helping families prevent foreclosures,” butrecent practices in the short sale market place result in the opposite.  In other words, Fannie Mae’s actual practicesand guidelines submitted to their loan servicers are resulting in moreforeclosures.

Hereare some recent trends observed with Fannie Mae and attempted Short Sales:
1.  Fannie Mae loans are being foreclosed on muchsooner than other conventional and government loans.  (For example, in the last several months, weare aware of two Fannie Mae foreclosures in our local market where the Borrowerwas only four months behind.)  MostLenders allow a much longer delinquency period before a foreclosure.
2.  Once a foreclosure is started it is practicallyimpossible to postpone due to recent Fannie Mae Guidelines. Most Lenderswill postpone a foreclosure to allow sufficient time to review the short salecontract. 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 priorto thirty days before a scheduled foreclosure, or
        B.  The completed Short Sale Package has to be submitted to Fannie Maewithin ten days prior to the scheduled foreclosure date, or
       C. Fannie Mae has to approve the short sale within ten days (or accordingto another negotiator within three business days) of the scheduled foreclosure. 
3.   Another important trend with Fannie Mae istheir policy of no longer releasing the deficiency for the Short Sale Seller aspart of the Short Sale approval.  TheBorrower is losing their house and being forced to move as a result of theirhardship (lost job, divorce, illness, etc.) Now with this practice, the Borrower is uncertain as to whether therewill be any future collection activities on the deficiency.  Most Lenders will waive the deficiencyentirely or waive it for a minimal cash contribution.
Unofficially,the loan servicers are saying Fannie Mae will probably not attempt to collectthe deficiency.  But legally in Virginiathere is a five year statute of limitations from date of default.  The Borrower has already suffered enough andusually has no money to pay the deficiency.
Insummary, Fannie Mae needs to change their actual behind the scene practices andguidelines.  They need to adhere to theirstated policy of “helping families prevent foreclosures.”  Each foreclosure that can be prevented with ashort 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 roughtime with trying to short sale their underwater properties. 
PSS—Andon 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

About Charlotteville Personal Injury Attorney

Personal Injury attorney helping people injured in automobile, truck or mortorcycle accidents.
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3 Responses to Tucker’s Editorial: Fannie Mae’s incompetence causing more foreclosures, not less

  1. 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.

  2. lindacork says:

    Mr. Tucker,
    I recently was able to successfully get the issue of the non-release of the deficiency addressed for one of my clients.

    Astonishingly, while Bank of America informed me and my client that the deficiency had not been waived on the first lien, and that there was nothing they could do about it, Fannie Mae officials claimed that they “did not know why the 1099 had not been issued”.

    It appears that there is a huge disconnect between what Fannie Mae believes their guidelines instruct servicers to do with respect to the deficiency, and what servicers believe Fannie is instructing them to do.

    Having been through this now with my client, and gotten the deficiency released, post closing, and a 1099 issued after being told by Bank of America that it just wasn’t going to happen, I would advise anyone working with a Fannie Mae short sale to contact Fannie Mae directly if there is a problem with getting the deficiency on their short sale waived.

    I’m not a member of CDPE, but they have this short video interview with Marcel Bryar, a Fannie Mae VP, where he says “If we approve a short sale, we’re not going to pursue a deficiency”.

    It is worth following up directly with Fannie Mae if you are having problems getting a deficiency waived, even after the closing, as I was happy to learn.

  3. Melissa Taylor says:

    We have a Fannie Mae loan. We are having trouble getting a waiver with our short sale. Husband lost job and 6 months later mine was transferred 2000 miles so we moved. We don’t reside in our house, we are desperately trying to get it sold (we have a buyer and a lender approved short sale) but the lender is not budging on the waiver and the recourse in our home state is 6 years, that scares us.
    Our lender rep is just being obstinate, uncommunicative, won’t return calls nor does he ever answer his phone and the email he send is lacking in details – just keeps saying no. The idiot doesn’t even realize we don’t live in the house, we have offered a settlement to which he won’t even address. He just says NO Waiver. Thats it.
    How does one get in contact with the right dept. of Fannie Mae?

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