The Associated Press is reporting that Freddie Mac reported a $4.1B 3rd quarter loss and is asking the government for an additional $100 Million.
Wait one moment here! This is the same horribly inefficient Freddie that takes forever to make decisions on their assets for sale and once they do make that decision, they like to take up to a week just to get signatures when a cash buyer is more than capable of closing the property in that amount of time. This is just to execute a contract – the nightmares usually begin during the escrow period.
I would actually love to pin this one on the listing agents HOWEVER this is a pattern with ANY Freddie Mac property I have ever been involved with a buyer.
So it is painfully obvious that Freddie is not in any hurry to get their REO properties off the books. They also appear to be in a position of losing large amounts of money with those assets.
Let me tell you a story about ONE Freddie Mac REO property in Las Vegas that could have saved them a good $40K – let me assure you that I am pretty positive that this isn’t an isolated incident either!
The REO property was listed and had a good $250K offer on it. During the inspection phase, leaks were found in two toilet bases upstairs and this black substance (that resembled mold – but I am not a mold expert.) They went on to the appraisal phase and the appraiser saw that black substance and suggested the lender request more inspections – from a mold expert. It was determined that the black substance was, in fact, mold. The lender required the mold to be repaired if they were to lend money on this house. The buyers attempted to obtain financing from all sources (including VA but I am not sure if they tried the 203K route since these weren’t my buyers.)
Freddie Mac refused to facilitate repairs (estimated $10-15K) and the buyers lost their dream house. The house was placed back on the market and sold for $200K to an all cash buyer EIGHT MONTHS later. Obviously holding costs for a Las Vegas pool home for 8 months will run into the thousands. In conclusion, for whatever reason, their lame decision to refuse repairs cost them$35-45K – on just one house.
NOW, the ramifications of that house closing (in good condition mind you) a year and a half ago: sinking values in the entire neighborhood where we have watched approximately 10 other Freddie properties come and go since this one closed. Every appraiser and BPO agent who is not aware of what lurked in that property will base their futureREO pricing of Freddie & Fannie and all other distressed assets with that one comparable for 3-6 months after close!
Freddie Mac shot themselves in the foot. Can we just let them die now? Every taxpayer should be furious on how much money we have sank in to Freddie and Fannie. Every taxpayer should cry for accountability & reform. It goes well beyond the whole “it’s the toxic loans stupid” (as outlined in the article) to asset management and maybe even seeking deficiency judgments.
But who am I? Just a lone agent playing around in foreclosure ground zero.