Straight Talk on Short Sales












By Bill Armstrong, Treasurer, National Association of REALTORS®

Last week, NAR participated in a positive meeting with Fannie Mae, Freddie Mac, and the Federal Housing Finance Administration (FHFA) —the federal agency in charge of housing finance oversight. We talked about additional ways to improve the short sales process for mortgages backed by Freddie Mac or Fannie Mae. I was pleased to participate and to represent NAR along with Scott Louser, 2012 Vice President and Liaison to Government Affairs.

All in all it was a great meeting, made even more so by the fact that we brought a number of REALTORS® with us so that officials at FHFA could hear directly from those in the trenches, about the difficulties they experience during a short sale. And bringing together the individuals facing those challenges day in and day out – REALTORS® – with those in charge of oversight, is the most effective way to convey the reality of the situation and the need for a solution.

Now, fortunately there has been some progress recently, such as the amendment Freddie Mac made to its policy on short sales affidavits, at the request of NAR and the American Land Title Association. We continue to push lenders to implement the updated policy.

But as we all know, short sales continue to be an issue for many REALTORS®. That’s why NAR is working hard with both the GSEs and regulators to find real, workable solutions that will simplify the process, and we won’t rest until that happens. FHFA has been open to discussion and were very interested in hearing directly from REALTORS®. So I am optimistic that changes will be made that will benefit REALTORS® during a short sale…and rest assured that we here at NAR will continue to push for them to happen.

  1. I have a FNMA backed short sale with PMI that has been on the market for 2 1/2 years. The house was beautiful 2 1/2 years ago but because FNMA continued to take too long for a counter that was always $50,000 higher than the property is worth, buyers in contract kept walking. Now the house has mold in the basement due to busted pipes, the roof needs to be replaced entirely, baths gutted, floors are buckled.

    Buyer #6 in December and he was going to repair to rent. He hired an appraiser and we attached the appraisal of $150,000 to our purchase contract. FNMA countered back at $214,000. I asked the servicer to ask FNMA how do they expect a buyer to get a mortgage for a $214,000 house that was appraised for $150,000. How can they justify holding inventory for 2 1/2 years that could have been taken off their books. FNMA declined the offer.

    The problem is not that FNMA is not very quick and streamline to work with. Quite the opposite now. The problem is their guidelines are due to the Obama administration is paying the deficiency of whatever it is on their properties. So, why sell it in a short sale? The servicer keeps getting paid in full by FNMA and then FNMA will get their deficiency money in the end. The taxpayer is paying for this highly corrupt and gross practice.

  2. I have been doing short sales for the last 4-5 years. Honestly, I haven’t seen much improvement on the lenders side.
    I have experienced improved submission platforms like equator and commander but the process is still very much the same. It’s hit and miss. Some short sales are approved within 60 to 90 days while others take 5-6 months. The lenders continue to ask for the same documents over and over. In some case the BPO’s expire and have to be redone. I have one that is on its 3rd BPO.
    Anything our association can do for us will be a definite improvement.
    Phew! That felt good!

  3. Good article and information. Short sales are almost never easy and the tend to frustrate the buyers.

  4. Gayle

    Does “as is, where is, no inspections or warranties or disclosures given by seller” totally relieve a seller of a known adverse defect in the sale, liability of disclosure? Thanks for response!