Short Sale Negotiating with Fannie and Freddie
Lately, I’ve been doing a lot of negotiating with Fannie and Freddie—you know… our friends Fannie Mae and Freddie Mac. These friends have been in the news quite often of late, and they certainly aren’t making short sale processing any easier.
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For homebuyers and home sellers not involved in short sales, there may be very few reasons to even pay attention to whether Fannie or Freddie is the investor note holder. But, for those of us working in the wacky world of short sales, these names become increasingly more important for a few reasons.
For starters, both Fannie Mae and Freddie Mac have created their own loan modification and short sale (HAFA) programs, which may benefit those borrowers who want to participate in loan modifications or short sales. Each of these programs has some very succinct and specific guidelines. So, before taking a short sale listing or working with a prospective short sale seller, you’ll probably want to figure out whether the seller’s note is owned by Fannie or Freddie and learn more about these programs.
Another reason to check out whether a note is owned by Fannie Mae (and this is one that I like) is because Fannie Mae pays a six percent real estate commission on short sales. A few years back, Fannie Mae made this fact public at a time when many of the lending institutions were cutting real estate commission to the bare bones. And, for those of us in real estate who are working twice as hard to make half as much money, this assurance of a six percent commission is pretty good news.
A third reason to check into whether Fannie owns your note has to do with foreclosure. On August 31, of last year, Fannie Mae announced that they would be penalizing servicers who languished too long and did not respect state foreclosure laws. Long gone are the days when you can call the servicer 5 minutes before the foreclosure sale and ask for a postponement. So, with that in mind, borrowers need to be more proactive when it comes to addressing their pre-foreclosure options.
So, how do you know whether Fannie Mae or Freddie Mac owns a specific note? It’s easy. You do a little bit of detective work and look it up right here on the Internet. (Ain’t the Internet great?)
Knowing whether Fannie or Freddie owns the note at the beginning of the transaction will go a long way towards providing quality information to borrowers and prospective short sale sellers.
Photo: flickr creative commons by Ell Brown