Fannie Mae Fights Slow Foreclosures
Fannie Mae won't fade away so easily -- at least not before it strikes some fear into sluggish loan servicers. The company has announced that it will penalize loan servicers who take too long to process foreclosures that clearly don't qualify for a short sale or loan modification. The fines will be based on a formula that considers: the outstanding balance left on the loan; the rate of return for investors in the mortgage-back securities supported by the loan; and the length of delay, among other criteria. Every state has a prescribed foreclosure-completion timeline, which can vary from as little as 60 days, in states such as Georgia and Texas, to up to 300 days, in states such as New York and New Jersey. The measure is being taken to decrease the number of vacant homes with delinquent mortgages that are being held off the market (known as "shadow inventory") which pull down home and rental prices. According to Fannie's quarterly report, about 450,000 single-family loans securitized into mortgage-backed securities were seriously delinquent or in the foreclosure process as of June 30 -- nearly 5 percent of the 9 million guaranteed by Fannie.
In the spirit of recovery, check out foreclosures for sale in your area.