FNMA Rejects Short Sale Offer, Spends Money Foreclosing, Then Lets House Sit.

By
Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

Yet another sad line item in the chronicles of short sale history.

  • Fannie Mae turns down market value short sale offer.
  • Fannie Mae issues an unreasonably high counteroffer, ignores appeals.
  • Fannie Mae continues to spend money on the foreclosure process, and continues to lose money on a monthly basis.
  • Fannie Mae eventually takes possession of the property after the foreclosure auction.
  • Six months later the property is still owned by FNMA and is not even listed for sale. Sitting there like an old shoe.

The dollar amount of additional losses incurred by FNMA since they turned down the short sale far exceeds the amount they would have gained if someone would have met their unreasonably high counter offer.

This is just one of many cases in Louisville, KY., but this scenario plays out every day across the nation.

What experiences have you had?

Can anyone explain this counter-productivity?

Posted by

 

 

Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East

Website David.DavidHalpernRealtor.com

(502) 664-7827

 

 

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Rainmaker
127,962
Wendy Cutrufelli
Alain Pinel Realtors - Walnut Creek, CA
Contra Costa Realtor

This sad tale happens over and over again.  FNMA required my sellers to contribute $3,000 to close the short-sale.  As a family of 6 whose sole wage earner lost his job, they didn't have the money.  Both realtors agreed to pay the $3,000 from our commission.  FNMA, through Bank of America, declined our offer to provide the funds and refused to approve the short-sale stating "the funds must come from the seller".  This was nothing short of punitive.     I sent an email to the head of Loss Mitigation for both Bank of America and FNMA.  Never received a response and the short-sale was declined. The home is now sitting vacant waiting for approximately 4 more months for the foreclosure sale.....in an area with over 250 pending foreclosures and declining market values.  Unbelievably poor decision on FNMA's part.  Is it any wonder they are in trouble?

Dec 07, 2010 03:22 AM #1
Rainmaker
1,343,529
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

Dave - Unfortunately common sense and real estate don't seem to go hand in hand these days.

Dec 09, 2010 07:21 AM #2
Rainmaker
832,763
Sheila Newton Team Anderson & Greenville SC
Berkshire Hathaway HomeServices - C. Dan Joyner - Anderson, SC
Selling the Upstate since 1989

Dave,

this does happen daily everywhere... I have several FNMA properties right now that sat for over a  year vacant before listing. I don't know what the hold up is, but it costs them money!! (therefore it costs us money)

Dec 09, 2010 03:22 PM #3
Rainmaker
2,191,376
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

It's the government, Dave. Makes perfect sense. It's how the government operates. On the one hand you've got the government saying it doesn't want to foreclose and take your home. On the other hand, it's telling people to stop making their mortgage payments or it won't approve the short sale and then Fannie Mae swipes the house anyway. Why? Because it makes more money foreclosing due to all of the government incentives it pays itself. It's incest.

Dec 11, 2010 01:11 PM #4
Rainmaker
207,870
Erby Crofutt
B4 U Close Home Inspections&Radon Testing (www.b4uclose.com) - Lexington, KY
The Central Kentucky Home Inspector, Lexington KY

Typical government - big corporation nonsense.  Clerks following policy set by idiots.

Dec 11, 2010 04:00 PM #5
Rainmaker
235,927
Patricia Beck
RE/MAX Properties, Inc., GRI, CDPE - Colorado Springs, CO
Colorado Springs Realty

It doesn't make any sense.  I had a short sale and the bank (not Fannie Mae though) wouldn't accept the offer.  It just sold last week at the auction for much, much less than the offer they rejected.  Completely illogical.

Dec 13, 2010 08:18 AM #6
Rainmaker
1,077,392
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

Dave, this sounds like just an average day in the world of real estate...there was another one in my neck of the woods that had multiple all-cash offers on a short sale, was contingent for months...then the property sold at auction for more than $65k less than the full asking price! Doesn't make sense, but as it's been said many times (and by Michelle in comment #3), common sense and real estate don't go hand in hand these days. :)

Leilani

Dec 16, 2010 08:49 PM #7
Ambassador
2,138,502
Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I would like to say this is unusual, but I think more and more banks are listing to unreasonable BPOs by agents that are hoping to get the listing as a foreclosure. I think the government needs to stop feeding the beast and let them take their lumps when they take a loss. What is happening is everytime a house forecloses, the government is giving the system more money for their loses, they have no incentive to do a short sale.

Dec 22, 2010 06:46 PM #8
Ambassador
536,079
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse

Dave - I see this happen way too much and it makes no sense.  In a similar vein I had clients put in an offer on a Fannie Mae REO.  They offered $900 below list price, cash contract, no contingencies, two week closing, use their own attorney to close.  Fannie Mae countered at full price, with their attorney to close.  My clients got mad and withdrew their offer.  One month later Fannie Mae dropped the price $15,000 and several weeks after that it went under contract and finally closed.

Dec 28, 2010 02:17 AM #9
Rainmaker
590,283
Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

Hi Dave,

I have been listing FNMA foreclosures lately. My experience has been that the auction is on Friday, the property is assigned to an asset management company on Monday and I am assigned the listing on Tuesday.

They want the occupants out and the property fixed up and put up for sale as soon as possible.

Phil

Jan 23, 2011 07:32 PM #10
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