Vancouver Short Sale Case #8

What you need to know about Fannie Mae’s guidelines

Location: Investment Property in Vancouver, Washington

Total owed: $226,000 on Fannie mae 1st Mortgage interest only with one lien to deal with. Sometimes you learn more from a deal when you lose a home to auction. This post is to help educate everyone so they don’t repeat my short sale mistakes.

Home was listed in December 2008 at $199,900 dropped steadily all the way to $150,000.

At first glance I was very excited to be working with one lender. I am sick of unwinding combo loans and dealing with the normal catch 22’s:

1. 1st and 2nd lenders can’t agree on what the 2nd will get

2. Twice the paperwork and time spent

3. Multiple BPO’s

Working with just one lender presents a new set of challenges.

We received offers at $140,000,$120,000 and $129,400. All of them couldn’t hang with the fannie mae 60-90 wait time. guess what folks these turn times are not going to get any faster. Obama just revised his making homes affordable program to try and help homeowners who are 125% of value. This change will bog down the entire fannie mae short sale system and push back processing times. Bank negotiators have to have extra training to be able to process fannie mae short sales and meet their guidelines.

I called and verified with the servicer and they confirmed it was a Fannie Mae backed loan and they were the end investor. It simply takes longer to unwind a Fannie Mae now government backed loan. From past experience they take 60-90 days to process and multiple BPO’s/ appraisals from loan servicers, Fannie Mae and in some cases from the mortgage insurance companies too. NOTE : Please give end buyers proper expectations on good things come to those that wait. We have to get approvals from both fannie mae and the loan servicer.

Our last standing offer was “CASH” $126,250 offer. It was netting the bank/fannie mae $114,285 which is 76% of the $150,000 current listing price. I spoke with the listing agent about maybe dropping the current list price down to $135,000 to $140,000 but before we got a chance to drop the listing price the latest BPO was done.

Damn! Boxed in..They countered at $150,000 netting the bank/Fannie Mae $129,036 which is 86%.

Cash Buyer walked..auction was Not postponed..and just like that the deal was dead.

This is the new irony of dealing with Fannie Mae.

-offer too low it doesn’t meet their guidelines but the price they want is too high to land a written contract.

-Can’t get deals approved below 85% of BPO and in some cases the latest listing price

-Mortgage insurance was also denied. It might have been an internal review Was it originated as owner occupied??

What if it was a cash out refinance with a pushed appraisal?

No wonder Fannie Mae is in so much trouble. Loosen up the guidelines!!@!!

When unwinding a Fannie Mae or Freddie Mac government backed loan you need to understand the incentive.

Click here and focus on Page 10

where they receive $1500 bonus if 92% of NPTV…guess what $292,656 is 91.4% of final Sales price of $320,000. (Interesting!!)

So here are the final numbers:

Client owed $226,000 on the 1st mortgage they would have accepted $129,036 ( $96,964 POTENTIAL LOSS)

57% of indebtedness… I wonder if their is a sub guide that helped kill my deal?? I have yet to see a short sale approved under 62% . I wonder if also it was a non owner and took less priority than the owner occupied short sale transaction. I will track this afterwards to see what it finally sells for. Even though I know our offer would have netted them more money, it doesn’t seem that important to them. It brutally reminded me that Short Sales are a privilege not an automatic assumption just because a property is “Underwater”.

Follow us on www.twitter.com Search under name Coastalmit.

Coastal Mitigation Partners
www.coastalmitigation.com

503-265-9553 Phone