Fannie Mae have blinders on their REO homes?

Foreclosures, Short Sales, Tax Foreclosures
1

I have a contract with Fannie Mae to purchase a REO home. Cash offer, only contingency is right to inspect.

Scheduled to close in March, 2012. One day prior to closing, their incompetent title agent found a title defect, we canceled the contract, they pull the property off the market.

4 Months later they cleared the title defect, we were notified and we get back into contract with them.

Since I already did a full inspection back in March, I opted to just do a walk through this time to make sure no new problems. Since March they had power off water off and they had to turn the utilities back on for me to do the walk through. Obviously no one has been inside the property.

I walked in and saw termite droppings and wings - NEW. I also saw a wall by the kitchen that warped badly and obviously something were leaking. The wall felt wet to the touch. Noticed outside light was hanging loose and some seams around the window. Back in March it was the dry season, it has rained non-stop since May, rain got inside the walls, no air conditioning…

I ordered a termite inspection and a mold test. Termite inspection of course came back with “EVIDENCE OF LIVE TERMITES” and mold test revealed a high concentration of Stachybotrys, the toxic black mold in the air indoor at 150,000 spores per cubic meters.

I got quotes from the mold remediation companies ranging from 5000 to 10000 to clear the mold, and that does not include repairing whatever that is to be torn out - which might include some kitchen cabinets against that wall.

I sent the report to my agent, who sent it to the LA. I asked to either give me a credit for remediation on my own, or have Fannie Mae pay for remediation. Listing agent said “we can’t sell a home with black mold, EPA doesn’t allow that…blah blah blah, can you send me the mold test report?”. Then a day later LA told my agent after he had a conversation with the asset manager at FM, that “we have a back up contract so if your buyer does not want it, we can cancel the contract, we are not going to do anything.” and “we don’t need to see your mold test results please do not forward it”.

So obviously, Fannie Mae is taking the position that’s in their REO clause “seller has no warranty or any knowledge with regards to conditions of the property blah blah blah” and they are just going to pretend this is not an issue and continue to sell that home?

Can they just ignore a health hazard like this and not even disclose it to the next buyer? I find this hard to believe a federal entity would do this.

2

Forgot to say this.

I wonder if this is a standard practice of Fannie Mae or this is something to do with a specific individual asset manager?

3

Send them a copy of the report, certified mail, return receipt requested with a letter telling them they will be obligated to tell the new buyer and if they don’t, you will.

4

Believe it. FNMA has been cutting corners like crazy recently. It’s pure speculation as to the motive behind it, but it is an election season and FNMA was bailed out by the taxpayers.

I do a lot of the initial service work with FNMA foreclosures, and this is just some of the cost-cutting crap we see:

-Expecting contractors to bleach/kilz mold. This does not eliminate mold! Better yet, they try to pay peanuts for this kind of work. I guarantee you it’s not being done by someone with a working knowledge of mold.
-Withholding information from buyers. We’ve reported damages, not uncoverable with a standard walkthrough, that are not relayed to prospective buyers.
-Cutting broker/realtor pay and dragging out reimbursements for utilities… Which is why utilities are only turned on for high-priced properties that will likely sell relatively soon.
-Letting properties sit, neglected, like you’ve seen. This leads to damages that they don’t pay to have fixed. Their recurring service pay is absolute crap, which is why foreclosures develop new problems when they’re being handled by desparate, greedy middlemen companies like Safeguard, FAS, Cyprexx, MCS, etc.

FNMA knows what they are doing. I don’t think any investigation will be launched soon, because the implications would undoubtedly be tragic for certain politicians, corporations, and CEO’s. It’s no surprise to me that FNMA had to be bailed out on a massive scale. FNMA is poorly and improperly managed at so many levels.

5

The best thing to do on a Fannie Mae deal is walk away.

6

It can’t be help. Fannie Mae is not the only problem most people face today and that even many people argue on its credibility.

7

Fannie Mae deals do require patience and a lender who knows the program. But if yo can get past that hurdle, the deals are doable-just difficult