Fannie Mae Introduces new Short Sale Tool
Buying a home is one of the most exciting and scary times in a person’s life but it is also very complicated. There are a number of parties to this transaction and they read like a movie credit in order of appearance:
Seller(s)
Realtor(s)
Buyer(s)
Escrow Officer
Loan Officer(s)
Inspector(s)
Appraisers(s)
Title Insurance Underwriter
Closing Attorney and or Settlement Agent
Government agencies owed unpaid taxes or levees
Former spouses who still have interest in the property being sold
Property and Casualty Underwriter
Mortgagee (if the property being sold is mortgaged)
And the list one son and on. Not only do the parties to the sale (the buyers and sellers) have to agree to the terms of the sale but to some extent so do the third parties involved. Any one of these players can delay or cause the sale to fail. Further complicating this delicate ballet of timing and process is the introduction of yet another party; The Investors who are owed more than the property is being sold for also known as The Short Sale.
Even though the Great Recession has been with us for more than 4 years, and Short Sales have been around for years, nobody has really been able to find a way to deal with them very efficiently. Fannie Mae is attempting to change that with the launch of the new tool they call The HomePath for Short Sales tool. The tools is divided into three categories:
- Borrowers Considering a Short Sale
- Real Estate Professionals Involved in a Short Sale
- How Can Real Estate Professionals Escalate a Short Sale Issue to Fannie Mae?
The new Short Sale Tool very clearly spells out the respective Agents duties and responsibilities as well as a plethora of answers to frequently asked questions. Only time will tell if this tool will actually alleviate any of the complaints both buyers and sellers have associated with Short Sale; Chief among them are the incessant request for documents from sellers, last minute renegotiation of sales prices and otherwise dismal communication by Fannie Mae.
For now at least Fannie Mae is making an effort, even if it is about five years too late. Is this just window dressing to cover up Fannie Mae’s inability to respond to their customers or do you think Fannie Mae is sincerely trying to help underwater Sellers to sell the homes quicker so they can move on with their lives?
Have you had any recent experience with The HomePath for Short Sales tool? How would you describe it?
I’d like to know what you think, leave your comments below and I will personally respond where appropriate.
Related articles
- Whats is a Short-Sale (raleighmortgageguy.com)
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5 Reasons Your Short Sales Will NEVER Close (raleighmortgageguy.com)
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Bank of America Accepted Short Sale – but they say you still owe (raleighmortgageguy.com)
- Making Home Affordable Explained | MortgageRefinanceRates.org (mortgagerefinancerates.org)
Since relocating from Northern Michigan in 2007 I have lived in Garner (27529) with my wife Melanie and our four children. With personal production of 8MM in real estate sales across Southern Wake County I am considered to be a local market expert in the following communities: Garner (27529), Fuquay-Varina (27526), Holly-Springs (27540), Apex (27502), and Raleigh (27603, 27604, 27606, 27609, 27610)) which spans from downtown Raleigh to Willow Spring including Lake Wheeler. Call or email me, I’m here to help! Ricardo Cobos (919) 526-0183
Search Y! Answers Advanced Searches views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.
I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received 13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.
One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion dollars. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.
The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.
The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.
Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.
Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today’s hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and Blame BUSH for all of Obama’s Mexican Drug Cartel connections. Fast & Furious.
Mr. Big Bear – Thank you for your interesting, if not convoluted reply. You’ve given my readers a lot to ponder.
Actually, it is the communication that is the least dismal part of the process. Let’s start by addressing the fact that Fannie uses ONLINE valuation models to determine fair market value. Sometimes, if generous, they will send a hungry real estate agent to do a drive-by BPO. And let’s also not forget that sometimes, it is plainly more beneficial for the home to be foreclosed so the bank can recoup more insurance proceeds and pursue deficiencies. Perhaps, they should be so generous as to perform a complete title and judgement search (and share it with the Seller) so that Jr liens can be discovered and worked earlier. Most sellers and their agents don’t have the common sense to contract title work at the beginning rather than waiting until the day before closing.
Yeah… communication is the least of my worries.