Treasury Secretary Timothy Geithner called for changes to be made in the US mortgage market at a recent press conference. He did not issue a hard and fast deadline. However, it is expected that he will tell Fannie Mae and Freddie Mac to get their houses in order within the next year. Geithner also made it clear that the United States cannot afford to have to bail them out again and that they were too aggressive in taking on risk.

Geithner has no real plan yet

As of now, there is no real plan in place for how to proceed about Freddie Mac and Fannie Mae. However, Geithner did make a couple of things perfectly clear. Freddie and Fannie would not be back to business as usual, and would never act as they did before the housing meltdown. The two mortgage houses would also not be put in position to try and dominate the mortgage market. He stressed, as outlined by Reuters, the mortgage industry was not sustainable as it presently stands.

No strategy yet

Housing industry insiders and economists vary, as they often do, on how best to reform the housing industry. All of the wealthier industrial nations practice some form of government securitizing mortgages, and as it seems to have a legitimate role, Geithner is for retaining this function of Freddie and Fannie to some degree. Others, such as co-founder of Pacific Investment Management, Co. Bill Gross, contend that totally nationalizing the housing industry is needed at this point. The investment impresario, according to Businessweek, says the private market cannot mount much if any, of a comeback at all by this point.

Something does need to change

What to do with Freddie and Fannie is subject to wild speculation, but few think nothing should be done. According to NPR, the government is already on the hook for $ 150 billion for the mortgage houses. For the first half of this year, 89 percent of all new American mortgages were securitized by Fannie Mae, Freddie Mac, or Ginnie Mae . Ginnie Mae, unlike Freddie and Fannie, is wholly part of the United States government, sells mortgage backed securities only if they meet specific standards and doesn’t lend mortgages.

More information on this topic

Reuters

reuters.com/article/idUSTRE67G3E820100817

Business Week

businessweek.com/news/2010-08-17/gross-urges-full-nationalization-of-housing-finance.html

NPR

npr.org/blogs/money/2010/08/17/129250765/socialized-housing-for-everyone

Short Sale Fraud - It’s not a law; nor is it an official policy, but it’s definitely going to be a problem regardless. Freddie Mac’s new short sale opinion – for lack of a better word – could create serious legal and practical issues for real estate investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” Essentially, the article stated that a short payoff or a short sale can be considered fraudulent if the lender agrees to a short sale that already has a third-party buyer in place that is paying a higher amount than the agreed-upon loan payoff amount. This could mean problems for investors who have been short sale flipping, or negotiating short sales with banks and then selling the properties at a profit.

The rest of the article detailed scenarios and red flags for “short payoff” fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not let the bank know that he already has a buyer ready to pay 95,000 for the property. When the transactions close – in this case on the same day – and the facilitator pockets the difference, according to Freddie Mac he has just committed fraud because he withheld information about a higher offer and causes Freddie Mac to take a “larger than necessary” loss on the sale.

The posting encourages buyers, sellers and lenders to look out for short sale fraud red flags. Freddie Mac considers entities buying property, borrowers who are suddenly in default and borrowers who have not reneged on all of their loans to be red flags for short payoff fraud. The article also says that resale options in contracts can be a red flag.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. It may not be considered breaking the law, but it certainly looks like Freddie Mac wants to make short sales as difficult as possible for real estate investors.

Short Sale Fraud - It’s not a law; nor is it an official policy, but it’s definitely going to be a problem regardless. Freddie Mac’s new short sale opinion – for lack of a better word – could create serious legal and practical issues for real estate investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” Essentially, the article stated that a short payoff or a short sale can be considered fraudulent if the lender agrees to a short sale that already has a third-party buyer in place that is paying a higher amount than the agreed-upon loan payoff amount. This could mean problems for investors who have been short sale flipping, or negotiating short sales with banks and then selling the properties at a profit.

The rest of the article detailed scenarios and red flags for “short payoff” fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not let the bank know that he already has a buyer ready to pay 95,000 for the property. When the transactions close – in this case on the same day – and the facilitator pockets the difference, according to Freddie Mac he has just committed fraud because he withheld information about a higher offer and causes Freddie Mac to take a “larger than necessary” loss on the sale.

The posting encourages buyers, sellers and lenders to look out for short sale fraud red flags. Freddie Mac considers entities buying property, borrowers who are suddenly in default and borrowers who have not reneged on all of their loans to be red flags for short payoff fraud. The article also says that resale options in contracts can be a red flag.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. It may not be considered breaking the law, but it certainly looks like Freddie Mac wants to make short sales as difficult as possible for real estate investors.

Short Sale Fraud - The newest problem in real estate is not yet a law or an official policy, but it is definitely going to create issues in the market. The latest opinion released from Freddie Mac on short sales presents legal and practical issues for short sale investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” The article stated, in short, that short sales could be fraudulent if the lender does not have information about a pre-arranged flip of the property after the short sale to another buyer. This is a serious yellow flag for short sale investors who make their living negotiating good short sale deals with banks, then selling their new properties to other buyers for a profit.

The rest of the article detailed scenarios and red flags for “short payoff” fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not disclose that he already has an outstanding offer for $95,000 from a second end-buyer. The second the facilitator puts his profits in his pocket, Freddie Mac considers him guilty of fraud because his negotiations caused Freddie Mac to ultimately take a “larger than necessary” loss on the sale of the property.

The writer encourages everyone involved in short payoffs to look out for short payoff flags. Flags include sudden default without explanation, borrowers current on other debts and buying entities. Additionally, they encourage people to look for an option clause in their purchase contracts that allow the buyer to resell the property.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. This may not yet be a law, but the signs are not good when Freddie Mac has posted such a direct attack on short sale investors.

Short Sale Fraud - The newest problem in real estate is not yet a law or an official policy, but it is definitely going to create issues in the market. The latest opinion released from Freddie Mac on short sales presents legal and practical issues for short sale investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” The article stated, in short, that short sales could be fraudulent if the lender does not have information about a pre-arranged flip of the property after the short sale to another buyer. This is a serious yellow flag for short sale investors who make their living negotiating good short sale deals with banks, then selling their new properties to other buyers for a profit.

The rest of the article detailed scenarios and red flags for “short payoff” fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not disclose that he already has an outstanding offer for $95,000 from a second end-buyer. The second the facilitator puts his profits in his pocket, Freddie Mac considers him guilty of fraud because his negotiations caused Freddie Mac to ultimately take a “larger than necessary” loss on the sale of the property.

The writer encourages everyone involved in short payoffs to look out for short payoff flags. Flags include sudden default without explanation, borrowers current on other debts and buying entities. Additionally, they encourage people to look for an option clause in their purchase contracts that allow the buyer to resell the property.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. This may not yet be a law, but the signs are not good when Freddie Mac has posted such a direct attack on short sale investors.

Short Sale Fraud - It’s not a law; nor is it an official policy, but it’s definitely going to be a problem regardless. Freddie Mac’s new short sale opinion – for lack of a better word – could create serious legal and practical issues for real estate investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” Essentially, the article stated that a short payoff or a short sale can be considered fraudulent if the lender agrees to a short sale that already has a third-party buyer in place that is paying a higher amount than the agreed-upon loan payoff amount. This could mean problems for investors who have been short sale flipping, or negotiating short sales with banks and then selling the properties at a profit.

The rest of the article detailed scenarios and red flags for “short payoff” fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not let the bank know that he already has a buyer ready to pay 95,000 for the property. When the transactions close – in this case on the same day – and the facilitator pockets the difference, according to Freddie Mac he has just committed fraud because he withheld information about a higher offer and causes Freddie Mac to take a “larger than necessary” loss on the sale.

The posting encourages buyers, sellers and lenders to look out for short sale fraud red flags. Freddie Mac considers entities buying property, borrowers who are suddenly in default and borrowers who have not reneged on all of their loans to be red flags for short payoff fraud. The article also says that resale options in contracts can be a red flag.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. It may not be considered breaking the law, but it certainly looks like Freddie Mac wants to make short sales as difficult as possible for real estate investors.

Short Sale Fraud - It’s not a law; nor is it an official policy, but it’s definitely going to be a problem regardless. Freddie Mac’s new short sale opinion – for lack of a better word – could create serious legal and practical issues for real estate investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” Essentially, the article stated that a short payoff or a short sale can be considered fraudulent if the lender agrees to a short sale that already has a third-party buyer in place that is paying a higher amount than the agreed-upon loan payoff amount. This could mean problems for investors who have been short sale flipping, or negotiating short sales with banks and then selling the properties at a profit.

The rest of the article detailed scenarios and red flags for “short payoff” fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not let the bank know that he already has a buyer ready to pay 95,000 for the property. When the transactions close – in this case on the same day – and the facilitator pockets the difference, according to Freddie Mac he has just committed fraud because he withheld information about a higher offer and causes Freddie Mac to take a “larger than necessary” loss on the sale.

The posting encourages buyers, sellers and lenders to look out for short sale fraud red flags. Freddie Mac considers entities buying property, borrowers who are suddenly in default and borrowers who have not reneged on all of their loans to be red flags for short payoff fraud. The article also says that resale options in contracts can be a red flag.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. It may not be considered breaking the law, but it certainly looks like Freddie Mac wants to make short sales as difficult as possible for real estate investors.