Fannie Mae released new guidelines on June 19th that require homeowners who are doing a short sale that is insured by Fannie Mae to spend at least 5 days as an ACTIVE listing in MLS (Multiple Listing Service).
With the competitive nature of the housing market many agents are acquiring contracts for their listings prior to listing them on the open market via MLS. Per the new Fannie Mae guidelines effective August 1, 2013, short sale listings that are Fannie Mae insured must be in MLS for at least 5 days, including at least one weekend, before the listing can be marked pending.
Actually, Fannie Mae is encouraging servicers to adopt this change immediately. Many will say why does this matter? As long as there is an offer who cares? Fannie Mae cares and it does matter. Listings that are not exposed to all the buyer demand in the current market are often placed in contract well below fair market value. We are seeing insider deals which have properties in contract well below what the property could have brought in the open market. Many buyers are not being given the opportunity to bid on these listings. The properties are then selling to insider investors who are purchasing them well below market value only to turn around and sell them for significant gains 30 days after the short sale closes. Investors are winning and owner-occupant homeowners are being priced out of the market.
Great job Fannie Mae for being on top of this issue. Hopefully Freddie Mac and other banks/investors will follow suit.
