It seems like nearly everyone has a story about an acquaintance who has been living, “rent-free,” in their home on a loan that went seriously delinquent months ago. There are a number of explanations for these types of situations, including lenders without the manpower to tackle the foreclosure process on all the distressed homes in their inventory and servicers who believe that keeping people in the homes – even people who are no longer making their monthly mortgage payments – is better than allowing them to sit empty. Now, however, Fannie Mae is aiming at “non-performers” and wants them off the books[1].
The GSE is not going to stop at simply alerting servicers that they may need to step up their performance, however. Fannie Mae will be assessing penalties for poor performance if there are unacceptable delays in default management, and may even conduct on-site reviews to evaluate servicer performance. Should the overworked servicers fail to respond to these review procedures in a timely fashion, Fannie Mae can assess fees even without a review process. At the same time as the announcement of the new policies, Fannie Mae updated foreclosure time frames in several states to make Florida 185 days, Maryland 90 days, Nevada 150 days and upstate and downstate New York 300 and 420 days, respectively.
Do you think that this is a reasonable step for Fannie Mae to take?
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[1] http://www.dsnews.com/articles/fannie-mae-says-foreclosure-delays-represent-breach-by-servicer-2010-09-02
I think Fannie Mae should be dissolved along with Freddie Mac.
The sooner we get rid of these two (freddie & fanny) the closer we will be to anarchy. This appears to be the goal of our politicians and would put the United States and others in the position they had engineered. The average person does not deserve to be in any position but the bottom.
This is just one more example of the government doing everything they can to screw all of us as hard as they can.
The bottom line on this “New” policy is more expense for the lender/note holder. As anyone whom has even a tiny bit of understanding about what is happening with foreclosures in this country knows, the banks are overworked when it comes to foreclosures.
By forcing this to be done “Faster” several things will happen; the operating costs for banks will go up, more banks will be forced into failure, fewer mortgage loans will be issued, property values will be forced down faster and further than it would have been if left to the banks. These are just a few of the UNINTENDED consequences that are easy to see, there will be several more.
Fannie and Freddie are two extremely corrupt government agencies that need to be dissolved before they have the opportunity to swindle even more billions of dollars, directly and indirectly, from the taxpayers of this country. They are two of the major players in what built up to be a housing bubble, a bubble that would have been hard to create without their mismanagement and even criminal policies.
One more good reason to stop Fannie and Freddie, dissolve them over the next 10 years and get the government out of home ownership again. They have had their few decades, it failed, and now it is time to close that chapter and move on instead of this continuing policy of sucking us all dry!
I couldn’t agree more with Chris. We have all heard the talk about a HUGE amount of shadow inventory. This will basically flush all that investory out on the market depressing home values once again. I guess that is one way to clean up the shadow inventory.
I would also agree with Chris. It is absolutely amazing that these policies are issued more as a “knee-jerk” reaction to an observed single condition than as the result of a well thought-out change to improve the overall problem facing both lenders and borrowers. Doesn’t anyone in the authorship positions of these goofy policies think through (as Chris did) the possible negative reactions in other, wider areas before making such decisions? Truly, the inmates are running the asylum…..
Fannie Mae is definitely out of touch with reality. Their mandate seems to ignore the various foreclosure moratoria. Besides, this move is highly political and it’s not classy. Chris’ insightful comment above points out several other unintended consequences, and I suspect several legal challenges to follow–which will further increase the costs that he presented.
Screw all of us? All of these people are not making any mortgage payments and trying to screw the system.
What does this really mean though? (the article)
Seems like more short sales & more houses going on market which are in distressed situations. Could result in a lower drop in house prices again. Which isn’t good.
They should have done this 12 months ago. The servicers are screwing Freddie out of millions (probably billions) by their lousy servicing practices. That money is being lost by the taxpayers.
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