If Your Sacramento Short Sale Involves a Fannie Mae Loan in Default, It Might Not Close

By
Real Estate Agent with RE/MAX Gold DRE #00697006

sacramento short sale agentA Fannie Mae short sale is no picnic, just ask any Sacramento short sale agent how adding an extra layer to the transaction can delay approval. Now, Fannie Mae is beginning to enforce another guideline. Fannie Mae says if a California short sale is in default -- meaning a Notice of Default has been filed and an auction date is set -- it will NOT allow a postponement of a trustee's sale. This means short sale sellers and their agents had get better those transactions approved and closed prior to that sale date or they're out of luck.

Sometimes sellers call an agent too late in the game. They wait until the Notice of Default has been filed. In the past, it wasn't that much of a problem because we could almost always count on getting the sale date postponed, but with Fannie Mae loans, it's not likely to happen anymore. In California, sellers have about 111 days after a foreclosure filing before the trustee's sale. That's about 3 1/2 months.

Many banks take at least 3 months to approve a short sale. Do you see the dilemma?

You can find out if your loan is held by Fannie Mae by going to this link to look up Fannie Mae loans.

Moreover, you must be in arrears before Fannie Mae will consider a short sale. Fannie Mae is under government control. So, the government is telling Americans to stop making their mortgage payments to do a short sale. And when the mortgage payments fall into arrears, it will foreclose and seize those homes if a seller can't close escrow within a 3 1/2 month period due to Fannie Mae's delays. It's a Catch 22. Lovely, isn't it?

A Land Park seller called me a few days ago, out of the blue and in tears. She berated herself for not finding me sooner. She was current on her mortgage and in escrow, trying to get her home in Land Park approved as a short sale. I guess her short sale agent did not realize that Fannie Mae would not approve the short sale because of her current status, so this came as a huge shock to the seller. She was trying to do the right thing and be responsible. Yet, Fannie Mae kicked her in the teeth.

Since the REALTOR Code of Ethics says I can't interfere in another agent's transaction, there wasn't much I could do for her. I get a lot of calls like that one, and it's very hard for me to refuse to give advice. It's in my nature to help people.

On the other hand, though, I've come up with a possible remedy to that delinquent mortgage payment problem for my clients (which I can't tell you because I can't give legal advice; you did a lawyer for that). Yet, there appears to be nothing that can save a seller who can't close prior to a trustee's sale date on a Fannie Mae loan. You can thank our government for that new wrinkle.

Just stick needles in my eyes, now, please. Oy.

Posted by

elizabeth weintraub

 

 

Weintraub and Wallace Realtors

 

 

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

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Topic:
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California Sacramento County Sacramento Land Park
Groups:
California Short Sales, REO's, and Foreclosures
Posts to Localism
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Lyon Realtors
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Tags:
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fannie mae short sale
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Ambassador
3,084,264
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Elizabeth:  I will be surprised if Fannie actually decides to continue following these guidelines.  I know their commission guidelines, where they aren't supposed to mess with the agent's commissions, are trampled on more than anyone thinks.  This just doesn't make sense. 

Dec 18, 2009 02:28 AM #1
Rainmaker
2,189,557
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Hey Kiss Ann (LOL): Little of it makes sense to anybody but Fannie Mae, I suppose. I'm astonished that there isn't more outrage over this on a congressional level. Are you seeing Fannie Mae cut your commission? I'm not. But maybe it's due to the fact I am selling my short sales through multiple offers, which tends to drive up the price. An agent in Florida told me her commissions have been cut by Wachovia, but I'm not experiencing the same thing in Sacramento.

sacramento short sale agent

Dec 18, 2009 02:35 AM #2
Ambassador
976,369
Steve Shatsky
Dallas, TX

Hi Elizabeth... is this just for California Short Sales???  I have never heard of such a provision for Texas.

Dec 18, 2009 10:33 AM #3
Rainmaker
2,189,557
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I don't know how the foreclosure process in Texas is handled, Steve. I would suppose that if you have the ability to postpone the sale, it could apply to Texas as well. But I know that Texas real estate law is very, um, different.

Dec 18, 2009 11:59 AM #4
Rainmaker
468,350
Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
Probate, Trust, and Investment Specialist

Elizabeth,

I do not see how this new enforcement jves with the stated objective of the government to do more short sales and loan mods to decrease foreclosures.

Marcy

Dec 29, 2009 02:25 PM #5
Rainmaker
240,110
MaryBeth Mills Muldowney
TradeWinds Realty Group LLC - Braintree, MA
Massachusetts Broker Owner

great wealth of information, many thanks.  Short sales are the longest sales in the world!

Jan 01, 2010 01:45 AM #6
Rainmaker
596,893
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Elizabeth -

Could it be that FANNY's arrears requirement only applies in states where foreclosure allows deficiency judgment?

Jan 09, 2010 03:12 AM #7
Rainer
125
Alyce Nelson

     This alleged Dec. 15, 2009 guideline has been flying through the Sacramento area like wild fire and it always the same exact email quoted that has somehow gone viral.... I say "alleged" because it is inconsistent with FNMA Guideline 09-09 that was published on Nov. 30, 2009 by FNMA; also because there is no record of a new guideline posted to the FNMA site since the Nov. 30, 2009 posting. 

     If this were indeed, somehow, only applicable to California, why is it only showing up in the Sacramento area and not all over the state?  A guideline like this would be HUGE and the outcry would be heard all over the state, not just in the Sacramento area. 

     Before anyone buys into this "guideline" please go back to the source and have them produce a copy of the FNMA Guideline.  Many things get misinterpreted in this business and this sounds like one of them.  If it is true I'd like to see the guideline.

     FNMA WILL also allow a servicer to complete a short sale for a borrower that is NOT in default as long as the hardship guidelines are met.  I have two in progress that ARE being allowed.  You need to check with the servicer and see if they allow it.  I know Aurora, Chase, and HSBC/Beneficial allow them because we are getting them done.

   AMNelson, Certified Distressed Property Expert (CDPE)

Jan 10, 2010 12:06 PM #8
Rainmaker
2,189,557
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Well, Alyce, come back and let us know if Fannie Mae actually approves those 2 short sales because I'm not seeing it happen. The banks will submit the paperwork to Fannie Mae and tell you it's going for review. Next thing you know, whammo, denied, unless the seller is in default.  Over and over, Fannie Mae has rejected current sellers, and I'm not the only high volume Sacramento short sale agent who has noticed this.

When I ask is it investor guidelines, I am told no, it's Fannie Mae.

sacramento short sale agent

Jan 10, 2010 12:56 PM #9
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