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Fannie Mae breaks rules to foreclose on unsuspecting homeowners

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Fannie Mae’s current role

This spring, we reported that eight bills had been introduced to wind down Fannie Mae and Freddie Mac while a bill was introduced this summer to merge the two government sponsored entities that together own or guarantee the majority of home loans in America.

President Obama himself has said that housing is the biggest drag on the economy but has not quite admitted the colossal failure that is the Housing Affordable Modification Program (HAMP) which is well known for spending taxpayer money with little return- few homeowners have actually received a modification, most end up in limbo and there are even claims of lost paperwork and stall tactics from servicers unwilling to properly execute the program. On top of the internal drama, the House approved cuts to the HAMP program, potentially ending the taxpayer involvement in the long run.

Fannie Mae has publicly proclaimed they will protect consumers while in the process of applying for HAMP or other federally funded loan modification programs.

Fannie Mae’s blatant rule breaking

Confidential records obtained by The Detroit Free Press reveal that Fannie Mae has gone against that promise by violating the government’s own rules to protect homeowners in process of applying for federally funded loan modifications. Banks were directed to foreclose on mortgages over 12 months delinquent, despite loan modification status. Free Press notes that other confidential documents they have obtained show “that Fannie Mae made clear to banks that Fannie expected a certain percentage of delinquent borrowers to lose their homes.”

The Free Press “obtained copies of more than 2,300 requests from various banks asking Fannie Mae for permission to delay foreclosure sales. These excerpts show two requests from Bank of America and Fannie Mae’s response, which reveals a directive to deny postponements when borrowers are more than 12 months delinquent, even when homeowners are negotiating loan modifications.”

Click to enlarge.

Fannie Mae spent $27,000 on a $3,000 debt

Fannie Mae has admitted in a confidential internal memo also obtained by The Free Press that they are willing to go to extreme lengths to foreclose on a home, in one case spending $27,000 to foreclose on a $3,000 debt.

To top it all off, Fannie Mae has warned lenders of the possibility “fining lenders for unauthorized foreclosure delays,” The Free Press notes.

Disastrous results

Homeowners are making decisions about their future based on rules that govern their protection during applying for a home loan modification through the government, which in itself is already an extremely daunting and nearly impossible task given HAMP’s horrific track record.

The housing sector continues to hemorrhage and any impediment to recover must be dealt with, but it is unclear how to deal with this monstrosity given that Capitol Hill is inconsistent with the future of Fannie specifically but inconsistent with housing regulation in general.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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92 Comments

92 Comments

  1. Gia Freer

    August 15, 2011 at 6:34 am

    Great article…if Fannie Mae is going to start "fining lenders for unauthorized foreclosure delays", then who is going to be fining Fannie Mae for breaking the rules on these unsuspecting homeowners? This article references HAMP but if the homeowner decides to short sell the home because they were denied via the HAMP program, I wonder what position Fannie Mae takes then…do they still foreclose with a legitimate offer on the table for a short sale?

  2. Missy Caulk

    August 15, 2011 at 6:46 am

    I had just finished reading the entire article in the FREEP, this AM.
    Wow, all I can say is WOW.
    Everyone should take a few minutes and read the entire article. Interesting "no comment" by the big guys.
    This is tragic! Why come out and boldly say they are working with homeowners when they are NOT.

  3. Carletta Lott

    August 15, 2011 at 7:30 am

    I do feel for the borrowers, but being in Servicing, I understand the other side. While the mortgagor may not have the funds, working on a trial mod, or just delaying in providing the documentation, lenders & servicers are picking up the tab. Someone has to pay the taxes, monthly inspections (FNMA/FHLMC sets requirements), property preservation, interests, and other ancillary fees. Many lenders are being forced to close their doors, because they have to pay these funds and are reimbursed once the property forecloses. The more money that has to be spent to maintain the property, not to mention the funds that are paid on non agency loans, where the funds are due to the investors on a monthly basis, whether it's PI or PITI which fuels trusts loans. Just as with the auto and other industries. On the other hand, depending on the state, a foreclosure could take anywhere from 2 months to 19 months. It is the lenders and servicers who pay the attorney fees. So in the end, the only people who survive and make the actual profit are the attorneys. Some waive fees and costs to help the situation, but there are those that milk these situations. No one wants to foreclose, but intil a system is in place to help the borrowers, these delays just prolong the inevitable. For many, the borrowers who quality or find assistance jump in get the help and move forward, but what about the borrowers who have no money to quality for anything. What is looked it is this… If we can help them temporarily, can they keep up on their own in the future… More jobs are needed along with other governmental changes. This is just my thought

  4. Angela Huggins

    August 15, 2011 at 9:14 am

    Ridiculous! How are these companies able to continue to do this? Really, haven't homeowners had enough of a beating with the market. Now, the companeis that are supposed to be working with them are targeting them directly. This is just insane.

  5. Manhattan Beach Realtor

    August 15, 2011 at 9:14 am

    And before you know it, the government will be the biggest landlord in town…

    • Randy Pereira

      August 15, 2011 at 12:51 pm

      Exactly! That is the issue I'm waiting to see addressed by NAR…

  6. Thomas A B Johnson

    August 15, 2011 at 9:24 am

    Socialists must grab all the private property. Next question.

  7. Ben Fisher

    August 15, 2011 at 9:41 am

    This has been going on for years with no end in sight. Looks like it is still happening…

  8. Paula Henry

    August 15, 2011 at 10:06 am

    Amazing that the government can continue to offer hope, while using such tactics to stop hope in it's tracks and further their own agenda.

  9. Greg Cook

    August 15, 2011 at 5:19 pm

    And now Fannie is being asked to purchase half of BofA's servicing portfolio?
    This kind of thing won't be news anymore.

  10. Robin Graham

    August 15, 2011 at 6:31 pm

    And who did NOT see this coming??? It has been writing on the wall for a very long time!

  11. Jeff Vaught

    August 16, 2011 at 12:51 pm

    Just another example of a total lack of leadership in Washington, starting at the Whitehouse.

  12. Robert Walker

    August 20, 2011 at 11:27 pm

    I blame the demonrats and the repugnicans for this mess. DC is so against the property owner it is so sad. Does not matter who is in the white house or congress as this always goes on…

  13. hirstdana

    December 13, 2012 at 4:25 am

    I was at the very tail-end of a short sale (HAFA) and Fannie Mae denied my foreclosure postponement on THE DAY OF foreclosure. I had a buyer, B of A agreed to their offer…everything. Then my realtor called Fannie Mae and asked why it was denied, they told him that I am too many months behind on my mortgage. I am 9 months behind. I thought they said they wouldn’t postpone homeowners over 12 months delinguient… I tried everything to avoid foreclosure that I could. Fannie Mae didn’t even give me a chance. However, the rep came by 2 days after foreclosure and was EAGER to offer $2,000.00 cash for keys…which is another example of misuse of tax dollars by a CORRUPT ORGANIZATION!!!!

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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