Honest To God, Fannie Mae Doesn’t Get It

fannie_maeI have ranted and railed against Fannie Mae and Freddie Mac here on this blog before.  Not only do they put up barriers to a true real estate recovery by keeping real estate investors, actually qualified real estate investors, on the sideline but in addition they staff themselves with asset managers that just don’t seem to understand real estate.  Seriously. 

Read the link above to see previous self-defeating decisions they have made.  But now I have a new story. 

I represent a buyer who contracted a Fannie Mae owned duplex in the Kansas City area for $140,000.  Based on comps we felt this was a bit high but that taking this position would ensure my buyer got the property for a good price wherein he could do the necessary repairs and still have room for cash flow. 

Bank of America did an appraisal that came back at $120,000, because of a very recent fire sale that Fannie Mae had held a short distance from the property in question.   So we submitted an amendment to the contract changing the sales price to $120,000.  Fannie Mae would not sign, not that they ever got around to signing the original contract, but after about 5 days of communications decided to order their own appraisal. 

stupidHow did their appraisal come back?  $130,000.  So they will sell the duplex for $130,000, right?  No.  Their answer is to ignore and reject my ready, willing and able buyers and to discuss a price reduction in the “future.”  We are welcome to watch the Kansas City MLS and submit a new offer when that does, or doesn’t, happen.

How does Fannie Mae get away with just suspending the realities of our current real estate market which they helped to create?  How does hanging on to another asset for a few additional months and then inevitably dropping the price to $130,000 help?  People, your tax dollars are at work here.  The machine is clogged up with “decision makers” located in NW Washington, DC and Dallas (I believe that’s the location of the asset manager) making decisions about whichever local market you live in.  I would seriously doubt if this asset manager has any actual real estate sales or appraisal experience.  But I’m quite certain the AM has a minimum of 2 weeks paid vacation, health care benefits, and leaves promptly at 4:59 pm each afternoon. 

It’s bad enough that we are in this current real estate situation.  It frustrates me to no end to know that it’s difficult to get out of it when I see the decisions being made by people who are supposed to know what is going on.

12 Comments

Filed under Kansas City Real Estate, Real Estate Investing, Social Issues, Uncategorized

12 responses to “Honest To God, Fannie Mae Doesn’t Get It

  1. If it makes you feel any better, you ain’t the Lone Ranger. 🙂 As discussed before, we lead much the same lives.

    It’s my opinion the policy wonks at Fannie Mae couldn’t find their a**es with both hands, a GPS, and a personal guide.

  2. It just drives me to drinking. 🙂

  3. Aaron

    Not to start a political battle here, but we want this same group (federal gov’t) to run healthcare? Looking at entities like Fannie/Freddie makes me really worried about that possibility.

  4. There is a fear that if Page 37 says “abc” then the federal employee (or quasi-federal employee) will not be able to use their own judgment to come to a reasonable conclusion. That’s always been my chief concern with federal oversight.

  5. Pat

    Who will give a loan for more than 130K if Fannie Mae’s own appraisal only 130K. There are two appraisal on the books for below 140K.

    For spite, you should provide Fannie Mae’s appraisal to who ever buy the home. The new owner may be able to suee Fannie for failure to disclose the previous appraisal. Or sue the third appraiser who goes over 130K.

  6. Pat, the buyer and I are working on how to make this very difficult for Fannie Mae including making sure it is on their disclosure. Of course, we cannot “make” them do it but we can verify it after the fact and therefore, quite possibly, cause some trouble.

  7. Another Investor

    I walked on a Fannie property recently. I came in pretty low because of location and condition but the offer was cash. It had been on the market over 60 days and there were no other offers. At first they declined to counter. Then they started coming down in $2,000 increments. The asset manager was totally clueless. I gave up the chase when they were still $8,000 above anything remotely reasonable. It just wasn’t worth the effort.

    60 days later it’s under contract. We will see if they get the appraisal and it closes.

  8. AI – “The asset manager was totally clueless.”

    That just about sums it up.

  9. Seems like they have an interesting philosophy here. I don’t understand why they wouldn’t take an acceptable offer from you, especially if there are no other qualified buyers inquiring. One in the hand is better than two in the bush.

  10. Well, yesterday they said they have a competing buyer. So we’ll see. When pressed on the appraisal disclosure issue I was told that I’m forgetting their appraisal (from the spring) showing it’s worth at least $140,000. That would be the appraisal they have refused to let us or the lender see.

  11. Lucas

    This seems to be an ongoing issue with Fannie Mae. For an organization that’s surviving on OUR tax dollars they seem to have a lot of ignorant asset managers who have no interest in selling properties at a fair price. We recently offered market value on a FM owned property and the asset manager countered at full price ($15,000 above market) plus requested we sign an addendum agreeing to pay the difference between appraisal and sales price. Do we look like we have a giant L on our foreheads!! Give me a break.

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