Fannie Mae REO Properties for Sale
Residential real estate borrowers who are behind on their monthly mortgage payments for an extended period of time are generally served with default notice by the investor (Fannie Mae) that funded the existing mortgage loan, thus commencing foreclosure proceedings. Foreclosures are mostly unavoidable despite the best efforts of the note-holding investor, lender or bank to mitigate them. Fannie Mae holds such foreclosed properties in its inventory of REO homes. Fannie Mae tries to sell of the REO properties they own in a timely manner to lessen their impact on the real estate market of the area in which the properties are located.
When a borrower is unable to make their schedule monthly mortgage payments, Fannie Mae repossess the property either after all foreclosure proceedings are completed, or if a deed-in-lieu of foreclosure was accepted by the defaulting borrower.
- A deed-in-lieu is also referred to as “voluantary conveyance”. It occurs when a borrower voluntarily chooses to transfer the title to the mortgage note holder to avoid foreclosure. Fannie Mae owned homes acquired in this manner are usually vacant at the time of assignment to a listing broker.
- In a standard foreclosure, the process is entirely legal and procedural. A foreclosure relinquishes the defaulting borrower of all interest and privileges on the mortgaged property. If a sale occurs at a public auction, the proceeds go towards paying off the mortgage debt owed to Fannie Mae.
The mortgage servicer handling the foreclosure immediately informs FNMA in case a sale occurs. This steps is usually completed within 24 hours. Right afterwards, the entire Fannie Mae REO management and disposal process begins. Receipt of the REOgram triggers Fannie Mae’s REO workflow process. One of the first steps of the workflow process is assigning the property to a listing broker.
Types of Fannie Mae REO Properties for Sale
The general composure of the REO properties held by Fannie Mae in its inventory are a direct reflection of the types of mortgages purchased and securitized by the agency. As Fannie Mae is the biggest player in the securitization of residential loans, the primary component of their REO listings is residential real estate.
- Single Family
- Manufactured Housing
Buying Fannie Mae REO homes
Residential single-family homes and multi-family homes make up the composition of FNMA foreclosed homes. Fannie Mae employs the services of local real estate brokers and agents to manage their portfolio of repo homes. Real estate professionals are tasked with the maintenance and listing of Fannie Mae REO homes. All the REO property listings can be found on their official reo website: http://www.homepath.com. Most of the listings contain comprehensive information related to the listed REO property. Investors and potential buyers can see photographs of the property along with property descriptions and other relevant details. Information about local schools, taxes and neighborhood information can be found on individual Homepath REO listings.
Financing of Homepath REO Properties
Before beginning the search for a reo home, the buyer needs to determine their affordability. A mortgage broker or financial consultant helping the borrower with reo financing should be able to provide a good estimate of the payment that is affordable based on the income, asset and credit profile. After determining the maximum loan amount, the borrower can proceed to search for suitable Fannie Mae REO properties that do not exceed this limit.
Before digging through Fannie Mae REO listings to find your ideal home, it is critical to get proof for pre-approval from the mortgage lender qualifying you for financing. Before providing a pre-approval for the borrower, the mortgage lender will seek to verify information through documentation related to income, employment history, assets, debts and credit history. Upon successful validation of all the qualifying criteria for a home loan, the lender will issue a letter of pre-approval. Having this letter serves a proof and allows sellers such as Fannie Mae REO department to confirm the seriousness of the buyer making an offer on their repo properties.
It should also be noted that a pre-approval letter doesn’t actually mean that the lender has already approved the borrower. The buyer will still be required to go through the entire application process needed for a mortgage loan. This stage of the purchase process begins soon after the signing of a binding contract with the seller (Fannie Mae).
REO property buyers should consult a trained and experienced housing counselor to resolve any concerns, anxieties and doubts related to home buying process of a Fannie Mae Homepath REO home. Compared to conventional loans, there’ll always more issues to address when financing of a Fannie Mae REO property is involved. The amount of down payment a buyer can put down at closing determines the types of home loans for which the buyer qualifies. Their services can be afforded by almost anybody as they charge little or no fees. Listings of qualified and approved housing counselors in an area can be found on HUD site. Counselors should be able to also provide current info related to government and private housing assistance programs, grants and other special help loan programs.