If you are a seller that is selling his or her home as a short sale and your mortgage loan is owned by Fannie Mae (or if you are a short sale listing agent working on a short sale with a loan owned by Fannie Mae), then you should definitely read this update on the Fannie Mae HAFA Short Sale Program.
On July 19, 2013, Fannie Mae made an announcement with respect to changes to the way Fannie Mae handles some components of the Fannie Mae HAFA Short Sale Program (as well as the deed-in-lieu of foreclosure program, entitled Mortgage Release™).
Fannie Mae HAFA Short Sale Program
The Announcement describes policy changes and clarifications to the following:
- Multiple listing service requirements for standard short sale/HAFA II
- Credit report seasoning for standard short sale/HAFA II
- Streamlined documentation requirements for transition from standard short sale/HAFA II to Mortgage Release™
- Property inspection requirements for Mortgage Release™
- Submitting the REOgram® and subordinate lien releases
- Title insurance requirements for Mortgage Release™
Servicers are encouraged to implement the new policies in this Announcement immediately; however, servicers are required to implement these policies no later than August 1, 2013.
The one item listed in the announcement that appears to have everyone’s knickers in a twist is the revised Multiple Listing Service requirements. According to the announcement:
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.
I’m not entirely certain whether agents are objecting to the 5-day period or the fact that Fannie Mae is making rules about how a short sale listing agent does his or her job. That being said, it always takes a minimum of five days to put a property on the market, receive offers, negotiate terms, and select an offer for acceptance. So, it does not appear that a 5-day period is entirely unrealistic. Of course, there might be a method to Fannie Mae’s madness (read: tongue in cheek). Requiring the listing agent to put the property on the MLS may bring offers higher than an offer that the agent obtains through a pocket listing.
So, that brings up the next question, would it be considered conspiracy to defraud the FDIC or Fannie Mae if a short sale listing agent does not present the highest offer to the lender? Or, if the short sale seller selects the offer and tells the agent which one to submit to the lender (and it is not the highest one), is it the short sale agent’s duty to fulfill his fiduciary obligation and follow directions of the seller? Does the agent have any obligation to the short sale lender?
Just some food for thought 😉