Fannie Mae National Real Estate Price Fixing is Here

     If you are a Realtor or short sale negotiator who has done a short sale with Fannie Mae as the investor during the last few months, this blog post will likely raise a question or two.  For Fannie Mae Real Estate Price Fixingeveryone else, it will definitely also raise an eyebrow or two. Government conspiracy theorists are certainly not a rarity in this day and age. Depending on who you speak to, many of our fellow citizens can come off as paranoid and irrational when speaking about all the secret plans they seem so sure our government and those in power are plotting and planning. While the theory I'm proposing on here is certainly not up to par with the New World Order, Illuminati, One World Government folks, it is certainly some concerning and valid food for thought, especially for those of us in the Real Estate and Mortgage industry.  Take a few minutes to read this blog post, and you'll likely agree and come to find that this really isn't about a conspiracy theory, but a very real and disturbing trend that is happening in our housing market right now.

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     Lets take a step back here and set the stage.  Over the last five to six years, we have seen real estate prices plummet in virtually every market across the country. This reality of the depressed housing market is certainly no secret. In many areas, prices have declined to as low as thirty cents on the dollar. Several years ago, As things became more and more depressed, our government stepped in.  Both Fannie Mae and Freddie Mac, who back the majority of our residential mortgage loans, were completely bailed out by the US government.  This forced overtaking was something that our government had to do, as the imminent collapse of Fannie and Freddie would have meant the complete collapse of the housing and finance industry, likely permanently.  This was extremely important, as instead of giving bailout loans to Fannie Mae and Freddie Mac, like the auto industry or the banks,Government Real Estate Price Fixing they actually took complete control of these organizations.  Our government then established the Federal Housing Finance Agency (FHFA) to "oversee" these organizations which are now referred to as Government Sponsored Enterprises, or GSE's.  Since then, the FHFA consistently dictates policy to these Government Sponsored Enterprises that still back over 60% of residential mortgage loans and completely control the secondary mortgage market.

     Now back to the present.  Fantastic news headlines in much of the country that in many of the markets that were hardest hit, prices now seem to get going up almost as quickly as they were once declining. Inventories are low, demand is high, properties are getting multiple offers from buyers paying over list prices the minute they come on the market.  But for those in the industry such as myself who are active in the short sale and distressed property niche, an interesting and disturbing practice that has been taking place.

Fannie Mae inflated BPO     In very recent times, just in the past few months, short sale agents across the country have been having difficulties with Fannie Mae short sales.  To be more specific, the difficulty has been with wildly inflated appraised property values that Fannie Mae has been insisting on for short sale properties. For those who may not know, we are not talking about regular appraisals, traditionally ordered by a buyers lender in order to justify a purchase price.  In this case, we are talking about appraised values that Fannie Mae places on properties, ordered by them and completed by their own appraisers, utilizing their own appraising and property valuation methods.  Utilizing these over inflated appraised values, Fannie Mae then demands more money for these short sale properties from patient buyers.  Anyone starting to smell the stink yet? Does this stink smell a little similar to the stink we all experienced several years ago with inflated buyer appraisals from before the housing market collapse?

Fannie Mae Inflated appraisal     For the most active short sale agents across the country, the past few months have produced quiet a few headaches with Fannie Mae.  It seems virtually every property valuation and appraisal done by Fannie Mae for a short sale is at least 10%-20% or more above current market value.  Values so inflated, that there are typically no comparable sales at all to come remotely close to justifying their prices.  Prices so high, that it most cases it would be virtually impossible for a buyer to find a loan and get an appraisal that would match the property values and prices that Fannie Mae is demanding.  The ironic part, is that these same buyers' loans who are purchasing these properties would of course eventually be sold off to... You guessed it, Fannie Mae! Because of the massive number of loans backed by Fannie Mae, this is widespread and is effecting a very high percentage of current sales. I manage a short sale broker network of over 12,000 agents and have directly assigned thousands of listings to agents in every State.  Trust me when I say that this is happening everywhere, and is also happening with Fannie Mae bank owned properties as well, as many agents are also reporting.  And when it comes to disputing these inflated values, it can be quiet a challenge for real estate agents and short sale processors to convince Fannie Mae to change their mind and sell the properties for actual market value.

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     Put two and two together, read between the lines, and it makes perfect sense that this is just Fannie Mae's and our policy dictating governments' valiant and likely effective attempt at mass, government controlled real estate price fixing.  Control the supply (market inventory), control the demand (interest rates ect), and then control prices and force up property values by demanding more money.  Fannie Mae and Government controlled real estate price fixing.  The tail wags the dog, and the dog has no clue what is going on.  A perfect example of the reality that housing has become completely socialized, but with the illusion that its just all part of the market cycle.  Just my two cents, for what its worth.

View my original article on Fannie Mae Home Price Fixing Through inflated appraisals...
***Please recommend it be "featured" on Activerain by clicking "suggest" at the top of the post!

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Comment by Catherine Gheen on February 28, 2014 at 12:44pm

Well, in my case it worked.  I would also recommend emailing reporters as well about the issue.  In some cases I have also included the attorneys from the Appraisal Institute in the complaint as they lobby against these practices.  I find in most cases when you escalate your file the bank will then become reasonable.  Yes they are government entities but typically there is a reasonable person in the CEO's office that will reach out to resolve the issue.

Comment by Mike Linkenauger on February 28, 2014 at 11:31am

Guys, we circulated a petition with the White House a year ago about this.  Now, Freddie Mac doing the same thing is rampant.  Here is the REAL problem.  BOTH Fannie and Freddie are government sponsored enterprises, overseen by FHFA, a government institution.  Complaining to the government about the government won't get anything done.  Now the media... that's a different matter.

Comment by Catherine Gheen on February 28, 2014 at 4:24am

Whatever is rewarded is reinforced.  So if the homeowner does not stand up to them, then it will keep happening.  Also beware if they foreclose oftentimes the 1099 they issue is for a different amount and sometimes they do not issue a 1099-C which stands for cancellation of debt.  So before they give up Fannie Mae needs to be held accountable.  The reason they are doing this is for reimbursement they are collecting from the government and Loss Sharing Agreements.  Why not fight for your client.  You just need they to write/type a simple letter.  You know after this meltdown is done they will remember how you fought for them. they will refer you to others facing similar actions.  Here I am seeing a new wave of homeowners defaulting, so we are heading into another wave.  Why let Fannie Mae take another victim in your client?

Comment by Sofia G on February 28, 2014 at 4:18am

Thank you, Catherine, I will try. I doubt that the owner would want to go that far -everyone gets tired already.

Comment by Catherine Gheen on February 28, 2014 at 4:09am

Has anyone else noticed that we are heading into another round of homeowner defaults, also has anyone notice that many banks are going back to the business practices of 5 years ago asking for borrower contributions, promissory notes, etc?  I received a call from a manager at a bank today asking me if their bank could ask for borrower contributions in California?????  Do they think we have forgotten what they pulled before?  I informed this manager the DOJ settlement references this behavior by banks.  It is a No No, but yet they are trying it again????  Wow maybe I should give seminars on this stuff.   I am not trying to be a stinker but agents you better do your research to protect your borrowers.

Comment by Catherine Gheen on February 28, 2014 at 4:05am

Yes, I did I filed a complaint with the CEO of Fannie Mae, the OCC Thomas Curry, the US Treasury, CFPB, and the CA State Attorney General.  You need to have the borrower write a letter asking these entities to investigate their file and then Fannie Mae will back off.  If you also contact the Appraisal Institute they have a team of attorney's that deal with the banks also.  If you look up the meaning of appraisal it NEVER references falsely inflating values.  Go after them, more agents need to hold them accountable.  I spoke to a reporter from Bloomberg about what they tried to pull with me.  The bank called me the next morning after I filed my complaint to tell me they were more than happy to work with me and that the investor Fannie Mae would accept the buyer's offer

Comment by Sofia G on February 28, 2014 at 3:58am

Hello Mike,

A year later, after you posted this blog, I'm facing the same problem. Did anyone had a successful fight with Fannie Mae? I'm trying to find a course of  action to get my short sale approval. Any valuable information? contacts? 

Looking forward to hear from anyone who can help.

Thank you,


Comment by Michele M. Hunt on February 7, 2013 at 1:36am

Breaking news!  This morning a rep from the California Association of REALTORS spoke at our local general membership meeting, and she said they met with Fannie Mae last Friday to alert them of our concerns regarding the 20%-above-market-value appraisal issue that is killing our short sales.  Fannie Mae responded by saying they would give this their full, utmost attention, and this evening the following link was posted on our MLS site:


I don't know how long this form has been around, but this is the first I have heard of it.  It is easy to complete; I submitted it and immediately received the following confirmation email (with a trouble ticket number): "Thank you for contacting Fannie Mae about your short sale. We have received your inquiry and will contact you shortly."

I can hardly wait to get somebody on the phone...I only pray that I can hold my tongue, because I am p-r-e-t-t-y angry about what they are doing to the distressed-enough-already homeowners across America.  I encourage everybody out there to file a request for your Fannie Mae short sales that got blown out of the water...if we make enough noise, maybe they will do the right thing for a change.  Unlikely, but we can always dream.

Comment by Sharon Molnar on February 3, 2013 at 1:29pm

I have a house across the street that is vacant. Used to be Fannie. They sold to another company - in bulk. They have set the terms of the sale as... Must be rented for x dollars for x time, then you can sell it with our approval. They company bought 700 properties in Florida and are getting to purchase another Bulk lot from Fannie with the same terms.... Signed the petition too.

Comment by Yalda Alawi on January 30, 2013 at 12:56pm

Hey everyone, this petition is going around.  Please sign!!  It has to do with this very issue.  And spread the word, too!


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