Please Explain Fannie Mae, Ginnie Mae, Freddy Mac...

Sounds right to me too.

Ginnie Mae (or whoever backed the original loan), has a stake in the sale of the property, since it was a short sale.  If they don't agree to the short sale terms (offer you made), they can send it back to market (as they are working with the seller), as I believe it has to be approved by Ginnie Mae before a sale can be final.  Sounds like they simply denied your offer based on the internal appraisal.

I think the others have pretty much covered it, but I'm curious as to who actually takes the loss.  For example if they agreed to your offer of $45k under and it resulted in a total loss of lets just say $50k on the loan.  Does the bank eat that or does Ginnie Mae eat that because they're backing the loan.

I'm guessing that Ginnie Mae takes the loss because of the way your deal went down.

Depends a lot on each sale. 

The lienholder must agree to a short sale (where the sale is less than the amount owed on the property) because the property is the collateral for the loan.  If an offer is accepted, the lienholder allows the property to be transferred to new owners.  Now the lienholder has to decide whether to write off the difference between the loan amount and the net proceeds of the sale (which they might do) or whether to hold the borrower liable for the difference as unsecured debt (which they might do).  So...if they believe the borrower can repay the total amount, they'll probably not take the loss and hassle the borrower (at some cost) into paying their debt. 

If the lienholder writes down the debt, the borrower must report the writedown as income and pay income taxes, so neither comes out unscathed.  Keep in mind that the borrower walks away from the sale with nothing!  (When we bought our first house, the sellers were underwater and brought several thousand dollars to the closing to pay off the loan.  Not much fun for them.) 

Congrats.  Glad to see it worked out for you.

Still a crazy sequence of events, but I'm glad you two are getting this house

Congrats.  I have heard of this happening before, especially here in Florida.  Make an offer it gets turned down, wait several weeks make the same offer or less offer and it gets accepted.  My only guess  is that someone else looked at the paperwork and processed it differently.

I'm no expert, but have been trying to buy up in this depressed market. The market is so flooded with inventory they have no choice to fight for every house. If the loan holders just took what it could get for a property for each property, they would be cutting their own throats. They would take a huge loss on all of their holdings when the market crashed. sure they are not getting money for that one house... but they are actually saving billions.

I low balled a short sale, they countered with asking priced +. Basically told me to go jump in a lake. The thing is it was only mildly distressed. It was actually worth the asking price and I was willing to pay it. We were not ready to buy right then though so I needed something I could not walk away from in order for me to take on two mortgages. It stayed on the market for another 6 months and they got their asking price.

Trying to sell my house, the only offers I got were low ball offers... except the people doing the offering could only afford their low balls. They were shopping completely out of their price range. Everyone thinks they can buy a house these days for pennies on the dollar. My city was not hit as hard as others and our market is reasonably OK. We finally had to take our house off the market because it could not support what we needed for it. OH well. No big deal.

Obviously, in your case they did what they do every day... reject low ball offers from people just fishing. But you did your work, showed your evidence, and that you were serious and it worked out. Congrats on the new home and working for a good deal.