Last Friday, I received the following email from a local Realtor, representing the buyers on a short sale in which we represent the sellers, frustrated by how long the process was taking:
“I don't know if the lenders you deal with care, but this article that just came out really can negatively impact potential buyers of short sale listings in our area once they read it--wish you would share it with the investor…”
The article she mentioned was a piece in a local county newspaper that discussed buyer impatience with short sales. Perhaps she was under the impression that when we say “investor” we’re referring to an individual who owns a couple properties and is sitting around with pinky finger firmly entrenched in the side of their mouth - “Dr. Evil” style - contemplating their next move.
Unfortunately, “investors” are typically multi-billion corporations; mortgage insurance companies; or on occasion, hedge funds. I’m fairly confident sending them an article from a local newspaper won’t motivate them to change their processes, let alone leave them trembling in fear. Regardless, I responded with the following email:
“…as for the article, no, unfortunately the investor - Freddie Mac - does not care. Bank of America will receive almost all monies owed to them (upwards of 90%) from Freddie Mac, who will then receive most of the monies owed to them from you - the taxpayer. There is little incentive for them to move quickly/efficiently. It's a horrible system and I can assure you, we share your frustration. We've appealed for help to members of congress - from both sides of the aisle - in the various states in which we've had issues with both Fannie Mae & Freddie Mac (Michigan, Arizona & Colorado). Often, even they can't get a return call from their "contacts" with Fannie or Freddie. It appears that until the flow of money to both investors is cut off, we can expect more of this response.”
On Sunday, The Detroit Free Press launched a three part series about Fannie Mae (and Freddie Mac) and as you’ll see here, they went a long way in making me look like I know what I’m talking about.
MI companies and hedge funds aside, Fannie & Freddie represent a massive number of U.S. mortgages. Bringing attention to the way they’re operating – and the unlimited funding they’re receiving – is an essential component in fixing the mess that has been left in the wake of the real estate/mortgage crisis. I applaud the Free Press for their work.
After all, what’s going on out there isn’t a secret, but few people are aware of it. Our only hope for stopping this madness is awareness, followed by action.
While direct action – calling and complaining to Fannie & Freddie - will have limited effect, reaching out to our elected officials can make a difference. Congress needs to stop sending blank checks to these companies. Let them know that if money must go to Fannie Mae or Freddie Mac, it should be tied directly to homeowner assistance. If a borrower attempts a loan mod or short sale and is successful, provide Fannie & Freddie reimbursement for the full deficiency. If loss mitigation activities are attempted and denied, reduce the amount the investor will receive. An incentive needs to be in place to work with homeowners and currently, there is none.
Call your member of congress. Forward them the attached article. Let them know that the free flow of money to Fannie & Freddie must stop, or it will cost them your vote…
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