New GSE Short Sale Guidelines...More Out of Touch B.S. from the Government

Well said about the additional government red tape and speed bumps.

Good post, thanks for sharing it.

I agree with both Susan and Michael.  I too know that there are some shady deals occuring with short sales in terms of straw buyers, etc, so I think that letting people know that they are being watched is not all bad.  And at the same time, there is nothing wrong with an investor making money on a flip....as long as the agent presented the best offer.

I'm with Susan and Michael and Marti. We are supposedly bound by a code of ethics that sets a high bar. I don't think honest agents have a problem with these new guidelines. Agents skating over the ethical edge might have to start worrying that the long overdue prosecutions for real estate frausd might start with them rather than the banksters who deserve it. I won't shed any tears for agents getting caught up in cheating the banks. They are dishonoring our industry. For the hardworking investors flipping homes for a profit the legal way, this is only good news. 

Hi, Paddy.  I hadn't heard anything about this yet.  Whew!  It's just hard to keep up with the changes in the short sale market, isn't it?  There will always be people who will search out ways to take advantage of a situation to their own profit.....whether it is legal, moral, ethical or not.

Profit is a good thing and a necessary thing.  BUT when an agent/investor is involved in defrauding both the seller and a bank, it must be stopped.  We must never forget that in the short sale, the homeowner is still the titled owner....not the bank.

You are Correct Sir!

More worthless garbage... Joe Schmoe can sort of figure out what the market value of a home is with all of the online resources available but the lords of real estate can't figure it out when approving the sales price for a short sale. So when they screw up and allow a short sale to sell for far less then what it's worth.... all of sudden it's "fraud" because of how inept they are.

Regardless... the flippers and floppers are at the Trustee Sales picking up the deals nowadays.... Some of them that Fannie Mae & Freddie Mac denied as short sales for good prices... only to let them go at Trustee Sales for far less.

I can spotlight more then a couple where Fannie or Freddie did not move on the short sale --- took to long and just foreclosed on it --- only to end up selling it for less.

In my book --- that's fraud to the U.S. Taxpayer.

Thanks for your post. Wish more people would "get it" and start an Occupy GSE Movement.

Hi Paddy,

I read recently that the two GSEs have lost a combined total of 160 BILLION dollars these last four years!

Gotta have someone to blame, right?

So now its the floppers...

Phil

That is kind of ridiculous considering what hell they put you through when you buy a short sale. I mean I would think that 20% over the price of the short sale would be worth it so not to have to deal with the process! Just my thoughts!

Fraud is everywhere....short sales and less than ethical agents invite such behavior....

A better example of fraud is anything enacted outside of the boundaries of the guidelines of a contract.  Addendums are part of a contract - such as this example, arms length addendums, resale addendums, etc.

I am assisting with data gathering for fraud reports for one of the above mentioned investors.  They are only working on 2004-2008 closings now to find inconsistencies to pursue investigations.  There are reasons why I do not become involved in the listing side of short sale transactions and this is just one of them!

I would like someone to come up with the government definition of flipping.  I have clients that are buying properties, renovating them in two weeks then putting them back on the market.  Those short sales sitting empty for two years are usually a good candidate for this.

Freddie Mac has already implemented the addendum to prevent fraud, so maybe the GSEs will just be modifying their addenda. As far as DIL, I wonder how many people that will impact, since so many folks have more than one loan. Second lien holders probably won't permit it.

It is the golden rule... they control the gold so they make the rules. We as the professionals who are suppose to follow the rules need to call out those committing fraud and stick to our ethics.

Thanks for the heads up. I'd be interested in reading more of your insight about the DIL.

Freddie Mac sent out an announcement last Friday. It said the affidavits are changing and will no longer require an agent or / sellers / buyers to affirm there is no fraud. Instead the statements will now contain an affirmation: To the Best of My Ability and Knowledge . . .

So, that is certain a step in the right direction.

As an advocate of helping good people in a bad situation, I would rather kill a deal that smells funny than collect the check and worry about it later. having said that, does the GSE honestly believe that the people who are defrauding the banks are going to stop because of a piece of paper?

I have no issue with someone purchasing a property as a short sale then reselling it for a profit.  One of the problems I have is when the buyer markets the property prior to owning it as if it were their own.

Marketing the property for sale before you own it while the bank decides on the short sale is an issue.  It is illegal.  You cannot offer for sale something that isn't yours.

you know, kind of like if the banks were to start selling off bad loans then insuring against them for when they fail.  Who would do such a thing???

....oh. wait. Nevermind.

What? Not everyone has taken and passed the REALTOR ethics course? Unscrupulous investors and shady people in debt? What is the world coming to? Of course, another piece of paper signed by all will cure it (sic).