Fannie Mae clearing books of non-performing loans. Is this the beginning of a new foreclosure cycle?
Why Do Some Law Firms Act Like Used Car Sales Lots?
According to Bloomberg News: Fannie Mae will begin bulk auctions of mortgages, including some sales targeted for non-profit groups and small investors, as Fannie Mae moves to reduce the number of non-performing loans “sour mortgages” on its books.
“These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods and to offer borrowers access to additional foreclosure prevention options,” Fannie Mae Senior Vice President Joy Cianci said in a statement Thursday. “Our goal is to market these loans to a diverse range of buyers.”
Demand for soured mortgages has been increasing as Wall Street firms compete to buy loans at a discount after a real-estate market rebound.
“Investment firms including Lone Star Funds, Bayview Asset Management LLC and Selene Finance LP have been some of the biggest buyers of delinquent home loans.”
What does that mean for Fannie Mae –
it helps put their books into better balance. What Fannie Mae’s notice does not discuss is what this means for the homeowner. Fannie Mae has certain regulations dictating how to deal with default loans. The new owner of these default loans will not have that same oversight and/or regulation.
What does that mean for the neighborhood?
Without doubt it means foreclosures. How does that “stabilize the neighborhood”? Over a long period of time it might recycle the property into the hands of new owners. I said MIGHT. Most likely what will happen is that the foreclosures will lead to the gradual decline of the neighborhood. But, Fannie Mae’s books will look good!
The Federal Housing Finance Agency “FHFA” will require prospective investors to prove they’ve retained a loan servicer with a track record of handling delinquent debt, the agency said in a March 2 statement. Servicers also will have to offer aid to avoid foreclosures as a condition of sale.
Call me doubtful.
There is a long history of investors/servicers not following guidelines when dealing with loans in default. These failures include poor accounting, fee loading, misleading “workout” programs, the list goes on and on. So why should we believe that the buyer of these loans will act any differently than they have in the past?
Between you and me, I hold out little hope that they will change their ways.
WHY IS WALL STREET INVESTING IN REAL ESTATE? I agree the real estate market is rebounding. So, why would these Wall Street firms, who previously invested in discounted loans, buy new portfolios of delinquent loans? Call it common sense and simple math. With a better real estate market there is a greater return on the firm’s investment by way of foreclosure of these new loans. The loser is the homeowner who was led to believe that their home would be saved by a federal workout program. Some say the homeowner cannot afford the home, therefore it should be returned to the market place. I agree with that concept, but what makes me angry is misleading the homeowner into believing there is a solution to help them save their home, only to sell their loan to an investor who will foreclose. I call that deceitful, perhaps bordering on criminal behavior.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
WHAT HAPPENS AT THE END OF A COVID-19 FORECLOSURE FORBEARANCE? Can servicers demand a large balance? Generally, the servicers should not be demanding full payment following a COVID forbearance. There [...]
CFPB Releases Online Tool Helps Renters and Landlords Access Federal Assistance New resource helps renters and landlords find state and local programs distributing federal rental assistance funds WASHINGTON, D.C. — July 28, 2021: The [...]
Arizona Residential Eviction Actions Procedures – effective July 15, 2021 IT IS ORDERED that the following procedures are applicable to eviction actions governed by Arizona Revised Statutes, Title 33, filed [...]
Forbearance of Home Mortgages During COVID-19 Know your options before making a decision not to pay your mortgage 11/18/21 UPDATE – see summary of foreclosure alternatives This chart provides a summary of relief [...]
We are a debt relief agency; we help individuals and small businesses through the bankruptcy process. Attorney Advertising. This website is designed for general information only. Any information you obtain from this website should not be construed as legal advice, nor as grounds for forming an attorney-client relationship. You should consult an attorney for information on obtaining formal legal advice.