It takes a lot to get a freighter up to speed. But recent signs suggest that the two housing behemoths, Fannie Mae and Freddie Mac, are ringing for full power when it comes to getting bad loans off their books and trying to speed up the short sale process – including through a new initiative in Massachusetts.
But the two organizations are running against the tide, trying to hasten an already complicated and time-consuming process even as more distressed listings and short-sale eligible properties hit the market.
Both Fannie Mae and Freddie Mac are now offering bonuses of $1,200 to sellers’ agents, though only if the property is being sold to an owner-occupant. And the agencies have begun retroactively fining servicers for cases which remain unresolved after long periods.
On the short sale front, Fannie Mae recently launched a short sale assistance desk in partnership with MLS-PIN, the largest of the three multiple listing services in Massachusetts, and one of the largest in the country. The effort is a first for the New England region, though Fannie has launched other short sales assistance desks in other areas of the country hard hit-by foreclosure.
“The hope is that there is some dedicated effort put forth on these properties,” Kathy Condon, CEO of MLS-PIN, told Banker & Tradesman.
Rising Tide
The efforts come as the federal agencies’ shares of the nation’s distressed homes have been rising. According to public filings, Fannie sold 62,814 REO properties in the first three months of the year, up from 38,095 for the first quarter of 2010 – leaviong it with 153,224 REO properties on the books, compared to 109,989 at the same time last year. Altogether, Fannie and Freddie sold more than 90,000 REO properties in the first quarter, but their combined total inventory dropped by only 16,185.
With the agencies pushing to keep ahead of a tidal wave of foreclosures, agents on the ground are hopeful it could finally break the log-jam on short sales processing. The assistance desk is meant to help with that.
“We have actually gotten some traction,” Condon said. “We have got people who have put their requests forward. We’ll see if we get results.”
The assistance desk allows MLS-PIN customers to use a form embedded in the software to submit cases directly to Fannie Mae for faster processing. In order to be eligible for assistance, the listed properties in question must have a first-lien owned by Fannie Mae, the servicer must be in receipt of an offer, and the agent or broker representing the listing must have permission from the borrower to share their information.
Fannie officials said they think the initiative could help resolve some short sales in as little as a couple of weeks.
“We request that real estate professionals first make a reasonable effort to resolve issues by working through the servicer, but the assistance desk staff will help,” if servicers don’t meet deadlines, Marcel Bryar, a vice president of Fannie Mae, said in a statement.
Falling Short
So far, the efforts don’t seem to have had much impact on the ground.
“There was a stallout last fall with the robo-signing, and now there seems to be more pressure to get people out of their homes,” said John McGeough, a short sales specialist with Waltham-based McGeough Lamacchia Realty. “But I can’t say we’ve seen a real speed-up in response times around short sales.”
“I work directly with Fannie Mae,” said Linda Kody, broker/owner of Kody & Co. in Andover, which specializes REO sales. But listing resolutions are still “coming in fits and starts. I know the [foreclosure] paperwork is being reviewed, and modification, short sale and Deed-In-Lieu are being looked at before [foreclosure] starts.”
But even with increased attention and effort, it may be that short sales have too many moving parts – and interested parties – to be quickly processed.
“It’s still a battle with the banks, servicers, mortgage insurance companies,” Kody said. “I just don’t think short sales are ever going to be something a traditional agent can handle…they’re extremely time intensive to get them done.”
