Below is an example of the addendum that Wells Fargo is now requiring with the approval of their short sales:
This basically states that you are not allowed to transfer title even if it was being sold for a loss. It also states that after the 30 day deed restriction, you may not sell this property for more than 120% of what it was purchased at for a period of 90 days. Unfortunately, this is going to take place on nearly every foreclosure and short sale. Fannie Mae is the one behind this change to short sales.
In a recent press release on January 18th, Fannie Mae announced that all mortgage backed securities owned by this GSE will be sold with a 30 day deed restriction if they are sold as a short sale. Since Fannie Mae purchases nearly 70% of all mortgages, this will have a dramatic effect on how investors purchase these transactions. Investors who are in the transactional business will be forced to hold properties longer instead of quickly reselling them.
If Fannie Mae continues to follow the path of Bank of America, this will lead to a 60 day deed restriction. This deed restriction will not only be limited to short sales, but will also be placed on REOs as well. For many investors, this will end the way they do business. Many will change careers, leaving the few who can adapt privy to more inventory with less competition.