Fannie Mae Servicing Announcement
In June of this year, Fannie Mae made a Servicing Guide Announcement SVC-2013-13 in which some of their policies with regard to short sale and Mortgage Release™ (the latter being their term for deed-in-lieu of foreclosure) were clarified. On the surface, the Announcement appeared to add another layer of guidelines for mortgage servicers. However, there was one component of the announcement that seemed to get under the skin of many short sale listing agents across the country.
The Fannie Mae Announcement discusses minimum lengths of time in which a property should be offered for sale on the Multiple Listing Service. Here’s what the Announcement says with respect to Multiple Listing Service Requirements:
On or after August 1, 2013, all properties being considered for a standard short sale/HAFA II must be listed with an active status on a multiple listing service (MLS) for a minimum of five consecutive calendar days, including one weekend (i.e., Saturday and Sunday), prior to the servicer submitting the standard short sale/HAFA II recommendation to Fannie Mae for review, or approving the standard short sale/HAFA II.
The property must be listed on the applicable MLS, which covers the geographic area in which the property is located and a printed copy of the property’s MLS listing must be kept on file. If a property is located in an area that is not covered by an MLS, the property must be advertised in a manner customary for that real estate market for at least five consecutive calendar days, including one weekend.
Why Short Sale Agents Object
While I’m not entirely clear about the source of the listing agent drama, it seems to be that listing agents are objecting to one of two things:
- They are objecting to a 5-day MLS listing requirement. Such a requirement would mean that short sale listing agents must put all of their Fannie Mae short sale properties on the MLS for a minimum of five days (which includes one weekend). Note that if an agent puts a listing on the MLS, it usually takes a minimum of one or two days (even in the most efficient seller’s market) in order to receive an offer, and another day or two to present the offer and negotiate all of the terms and conditions.Any listing agent worth his salt would try to open up the home to multiple offers in order to attempt to get the highest and/or the best offer for the seller that s/he represents. So, the five-day period seems like a non-issue to me. However, if the listing is a pocket listing which the agent plans to sell himself, then the short sale listing agent might not like this new requirement.
- They are objecting to Fannie Mae imposing rules on how the property is marketed to the public. Lots of agents may be concerned with the fact that Fannie Mae is imposing a layer of rules about how a property is marketed when Fannie Mae does not own the property. Real estate agents are fiduciaries of the seller and not fiduciaries of the short sale lender, so is it right for the short sale lender to dictate how a property is marketed?
One of the largest problems associated with short sales has always been that the short sale lenders have attempted to rule the roost. Short Sale lenders have always expected the short sale buyers and sellers to agree to many of the (often ludicrous) terms and conditions required by the short sale lender. That being said, when you are a short sale seller looking to offload a humongous debt with no further consequences to you, sometimes you need to jump through a few hoops in order to do so.