In my last post, I detailed pretty clearcut evidence that Fannie Mae may have put together a sweetheart deal for one lucky real estate investor by creating an LLC in Delaware, then selling a block of 275 Phoenix REO properties at firesale prices. In that post, I said there are a number of things that can be done to make sure this wholesale hosing of the taxpayer doesn’t happen again.

Here’s my shortlist, along with a few things you can do to help drag these backroom deals out into the light of day:

Ban Fannie Mae from creating LLCs as a means of helping buyers avoid detection. FOIA (Freedom of Information Act) rules require full public disclosure unless a compelling case can be made for why information shouldn’t be disclosed to the public. Sidestepping this disclosure requirement by using the anonymity of LLC business transfers has to stop – immediately.

Require that REO properties be sold for no less than 90% of fair market value if current market conditions will permit it. Whether driven by a formula or by the number of days worth of inventory a market (like Phoenix) currently has doesn’t matter. What does matter is that an effort be made to sell REO properties for as close to retail as possible when the taxpayer is being asked to pony up for prior loan losses.

Stop outsourcing jobs whenever possible. Bundling local properties into LLCs in other states, depriving county government of much-needed transfer fees – and local economies of the economic impact of REO property sales – should never be allowed. If bulk property sales are going to be allowed by Fannie Mae, the sales should be completed locally, with local recording of local properties being mandated. In short, Uncle Sam should never be allowed to flex his considerable economic muscle unless he’s willing to reimburse the local economy for losses incurred.

These are just a few common sense rules that Fannie Mae should be bound by. Now for some steps you can take now to help ensure that everyone knows about the dirty tricks Fannie Mae has been pulling:

  • Get social – Social media is an effective tool for getting the word out about what Fannie Mae has been up to. First, comment on this article in the comments section below. Second, post a status update in Facebook or Twitter linking back to this article. Individually, your voice is just one voice screaming in the wilderness; together, our shrieks of anger will be loud enough that we’ll be heard, listened to – and responded to! Find the Facebook page of local news outlets and elected officials. Write comments demanding that Fannie Mae stop killing local jobs and harming local real estate values with their backroom LLC deals.
  • Get vocal – Talk to friends, relatives, church leaders, co-workers, cashiers – anyone who will listen. Tell them what Fannie Mae is up to. Encourage everyone you know to call federal and state elected officials, write letters to the same officials, and sign petitions demanding change.
  • Get local – Call, write and email local media outlets – newspaper, television stations and radio stations. Talk this story up. The more local media outlets know about citizen anger, the more likely they are to report on this story… and get results!

Taxpayers have been hosed by Fannie Mae for the last time. We’re only as powerless as we feel. And there’s plenty we can all do – working together – to make sure this doesn’t happen again.

Are you willing to kick back, relax and do nothing… or are you going to get involved today?