Both Fannie Mae and Freddie Mac have implemented policies to expedite the short sales process, including new resources to help determine property values, according to panelists at a property valuation forum during the Realtors Midyear Legislative Meetings & Trade Expo. Short sales continue to represent a significant portion of the real estate market. According to the National Association of Realtors (NAR), short sales accounted for nine percent of transactions during the first quarter of 2013.
“We are improving transparency and have created a dedicated short sales team to negotiate directly with real estate agents,” said Tim McCallum, director of short sales at Fannie Mae. “We now order a valuation as soon as an owner indicates they want a short sale, rather than waiting for an offer to be received. If there is no response to an offer from the loan servicer within 30 days, the case can be escalated. Our process is to counter every short sale offer.”
A foreclosure can be postponed if a short sales offer is received in a reasonable amount of time, preferably at least two weeks from a scheduled foreclosure. Fannie Mae created a web-based channel to help agents escalate short sale issues and receive confirmation that the agency is actively working to get those issues resolved.
“To help estimate the values of distressed homes, the team uses appraisals, which are required for all short sales, as well as Broker Price Opinions, and data from other internal and external sources, including current listings, pending sales and sold properties,” said Bob Martin, vice president of valuations at Fannie Mae.
The Fannie Mae valuation team includes 2,000 appraisers around the U.S., who have local competency and produce valuations within three weeks. Sales of comparable properties used for valuation need to be within the past 60 days.
Fannie Mae announced a policy late last year to guide the short sale process for all loans owned or guaranteed by Fannie Mae. Freddie Mac’s policy is very similar, and many larger servicers have comparable programs.
Under Fannie Mae’s policy, after a borrower contacts their mortgage servicer to determine eligibility, the buyer and their agent receive a recommended list price and have the opportunity to respond to the valuation. When an agent submits an offer to the servicer, Fannie Mae may review, and if approved it will proceed to closing.
“Under the Dodd-Frank Act there can be no undue influence on appraisers, they need to be paid customary and reasonable fees, and each state must implement legislation for Appraisal Management Companies, which includes a reasonable separation between appraisers and clients,” said Mark R. Johnson, senior vice president at Lender Processing Services Inc. (LPS). “It’s a good idea to provide the appraiser with documentation about comparable sales, facts about the home and local market conditions prior to their examining a property."