Fannie Mae: Short Sales vs. Foreclosures—Part 1
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 arena 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:
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 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 (which according to various loan servicers appear to be in conflict):
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.
Most Lenders will postpone a foreclosure to allow sufficient time to review the short sale contract.
If these trends or guidelines continue, Fannie Mae borrowers are in for a rough time with trying to short sale their underwater properties. Please look for Part 2 next week.
William D. Tucker, III, Sr. Partner
Tucker Griffin Barnes P.C.
Where deep insight equals powerful advantage!
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636
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