Fannie Mae has just started a new policy in the hopes of expediting REO sales. One aspect of this new policy is that Fannie Mae might accept offers to purchase repossessed homes without any notification to the loan servicers. Also, the loan servicers may have to reimburse Fannie Mae for any losses should it be discovered that the original mortgage on a home did not meet its eligibility or underwriting requirements.
Before, servicers had 15 days to turn over loan files for review if there was any question whether a mortgage on a repossessed home met Fannie Mae's requirements. As a result loan servicers had the opportunity to seek and find a any better offers for the property or buy it outright themselves rather than pay back Fannie Mae for an incurred loss.
However, recently the rules have changed. Fannie Mae recently announced to all loan servicers that they have implemented a change regarding assurance reviews. As an example, when Fannie Mae is notified that a property has been recently acquired, they will get a market value of the repossessed home and then list it with a real estate broker.
Fannie Mae said in its announcement, "When Fannie Mae receives an offer to purchase a property that is also subject to an underwriting or servicing review, Fannie Mae may accept the purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review. If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the lender will be required to fully reimburse Fannie Mae for its loss."
These changes were required because Fannie Mae has seen an increase in the acquisition of foreclosed properties and there is an escalating rate of seriously delinquent single-family home loans also coming in the future.
Fannie Mae has acquired nearly 100,000 homes through foreclosure during the first nine months of 2009 and sold close to 90,000 REO properties during the same period. By the end of last September, Fannie Mae still had close to 75,000 REO properties on their books, which was a 7% increase year-over-year.
For more information, go to www.fanniemae.com.