Fannie Mae REO Agents: Failure to Submit All Offers (FRAUD REVIEW)
Scenario Mark, a listing agent for a Fannie Mae REO property, received an offer to purchase the property for a price of $166,500. However, Mark communicated to Fannie Mae that the highest offer to purchase the property was $136,500 by Property Asset Management, LLC, an entity that Mark controlled. He did not reveal his affiliation with the LLC nor indicate that any higher offers were received. Consequently, the REO property was sold to Property Asset Management, LLC for the lower price. Shortly after, Property Asset Management, LLC sold the property for $166,500 to the original bidder.
Analysis This sequence of events represents a type of REO fraud categorized as “Flipping.” Participation in flipping of Fannie Mae REO properties involving misrepresentations, including omission, of material facts is strictly prohibited. Fannie Mae expects brokers to obtain the best possible offer on each property. Brokers are required to submit ALL complete offers to Fannie Mae within one day of receipt. Additionally, the Fannie Mae Master Listing Agreement expressly prohibits any entities or individuals affiliated with a broker or any broker personnel from purchasing a property that is listed with the broker without Fannie Mae’s express, prior, written consent.
Resolution Fannie Mae does not tolerate brokers or their agents participating in any sort of fraudulent behavior. Internal teams are dedicated to monitoring and investigating reports or evidence of suspicious activity. In the event such as this case, it is uncovered that a Fannie Mae broker is a party to any such prohibited conduct, the broker will not only be recommended for termination but the case will be reported to federal agencies responsible for investigating and prosecuting such cases. Fannie Mae has also begun implementing the HomePath® Online Offers program in various markets across the country. This program assists in preventing this type of REO fraud by creating more transparency for, and simplifying, the offer submission process.
Report Fraud to Fannie Mae Suspected REO fraud must be reported to Fannie Mae immediately. It is your responsibility as a broker or agent of Fannie Mae to report suspected REO fraud. Following are two avenues for reporting:
- Phone Fannie Mae at 1-800-7FANNIE (1-800-732-6643)
- Report the information via e-mail: firstname.lastname@example.org
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