Foreclosures which were guaranteed by Fannie Mae (Federal National Mortgage Association), a government-sponsored enterprise that offers mortgage-backed securities to lenders and effectively guarantees loans.
When it comes to understanding the real estate process, many people get confused with the different names and acronyms being used. One such example is Fannie Mae.
In short, Fannie Mae is an enterprise that is sponsored by the government. It is chartered by Congress, and its purpose is to provide more stability, liquidity and affordable money to the mortgage and housing markets in the United States.
Operating on the secondary mortgage market, Fannie Mae does not make home loans straight with consumers. Instead, they work in conjunction with brokers, mortgage bankers and other main mortgage market players to make certain that there is money to lend to potential home buyers at the most affordable rates. Fannie Mae funds these investments mainly by providing debt securities in the international and domestic capital markets.
Created as a federal agency as of 1938, Fannie Mae was chartered by Congress in 1968. They are a private company owned by shareholders and are involved in three different types of business including capital markets, single-family real estate and multifamily real estate.
Before purchasing any home, it's very important to understand the ins and outs of the process. Fannie Mae homes are very similar to purchasing any other kind of house, but it's still critical to know what to do as the process moves forward.
Although Fannie Mae works closely with homeowners to help them avoid foreclosure, it can still happen. Since Fannie Mae is the investor on these mortgages, their goal is to get them sold as quickly as possible in order to have the least impact on the neighborhood and area around them. For this reason, they work closely with local real estate professionals who are specialists in selling Fannie Mae foreclosures.
Before looking at Fannie Mae properties, or any property, it's important to find out exactly how much you can afford. One of the most disappointing things to do is start looking for property before you know how much you can really qualify for. In many cases, you will find out that you can't qualify for as much as you thought, and then you will be disappointed as you have to decrease your budget.
Make sure to seek out any financial support that you can get. For instance, there may be federal, state or even local government grants or assistance programs for down payment. If you are a first-time home buyer, it's especially important to check into this as there are many programs specifically geared towards someone who has never owned a home. You can even speak with a qualified housing counselor at HUD to get more information about programs that might be available to you.
If you are looking for Fannie Mae properties, you can easily find a listing of all available homes at Foreclosure Deals. Listings will have photographs, extensive property descriptions and other pertinent details that are important to buyers. You do not have to work with the special real estate agent to submit an offer on a Fannie Mae property. However, Fannie Mae does require that you're working with an agent to make your offer. For that reason, many buyers decide to work with an agent who specializes in selling foreclosure properties.
When purchasing any home, it's important to speak with a qualified mortgage lender who can give you a prequalification or preapproval letter showing that you have started to take the steps to get a mortgage. This means that the lender will likely check your credit report and ask you some personal financial questions to find out whether or not you can qualify, and for how much.
One great thing about Fannie Mae foreclosures is that many of them qualify for something called HomePath Financing. This type of financing is aimed at making it easier for people to purchase a home. Many institutions offer this financing, but it is only available on homes owned by Fannie Mae. This loan has some special features such as a low down payment and more flexible mortgage terms. Your credit doesn't have to be perfect to qualify, and it can be used for both owner occupant homes and investor properties. The down payment will be at least 3% but it can also be funded by your own savings, a grant, a gift or even a loan from a nonprofit organization, employer or state or local government. No appraisal is required on this loan which will save you around $350. Mortgage insurance is also not required.
Another unique loan that is available on Fannie Mae properties is called the HomePath Renovation Mortgage which allows you to finance the purchase and light renovation costs. There is a low down payment with flexible mortgage terms including fixed rate and adjustable rate. The down payment must be at least 3% but it can also be funded by the same entities as mentioned above. There is no mortgage insurance on this loan either.
Making an offer on a Fannie Mae property is very similar to making an offer on any other property. You will need to use the standard local or state real estate contract provided by your real estate agent as well as a complete Fannie Mae real estate purchase addendum. Fannie Mae also requires earnest money which will be deposited with the escrow company, title company or listing broker. Don't worry; this money will always be applied to the down payment and closing costs at the closing of escrow.
It is important to note that incomplete offers are not accepted by Fannie Mae. For that reason, make sure that you sit down with your agent to go over every detail in the contract and attached addendum. Documents are binding, so review the document with your agent or an attorney before submission. Sometimes, you may find yourself in a multiple offer situation since Fannie Mae foreclosures are very popular. At that point, Fannie Mae may ask for your "highest and best" offer by a certain date and time. Sometimes Fannie Mae might accept or reject your offer. Other times, they may choose to send you a counter offer as well.
It really depends, but typically, those who buy from Fannie Mae close within 30-90 days, with the average falling around 60 days. Complications like necessary repairs and backlog could add to delays.
In many cases, Fannie Mae will actually let the foreclosed owner rent the property on a month to month basis. This only lasts while the property is for sale, but it is an opportunity for a former homeowner to find a new place to live.
Once the foreclosed home goes to auction, anyone can bid and win - including family members. However, family members' buying short sales is expressly forbidden.
Fannie Mae - the Federal National Mortgage Association - is a government-sponsored enterprise that originally was created in 1938 during the Great Depression. The original purpose of Fannie Mae was to funnel federal money to local banks to fund home loans during the Great Depression, as a way to ensure housing was affordable and available. FNMA was originally a government institution, but in 1954, it became known as a "mixed-ownership corporation" with the federal government having a controlling share of stock and private investors holding the rest. In 1968, Fannie Mae became wholly private. Due to the housing crisis, Fannie Mae became a conservatorship of the federal government in 2008.
Typically, loans that are backed by Fannie Mae or Freddie Mac are bought from mortgage bankers who sell the mortgage as a part of a mortgage-backed security. One way you can find out if your mortgage is backed by Fannie Mae is to ask your lender or your mortgage servicer. In the event that they do not reveal that information to you, you can look it up yourself online through a loan finder tool provided by Fannie Mae on their website here. Under the Truth in Lending Act, a lender is required to tell you the owner of the obligation or master servicer of the obligation (i.e. who owns your mortgage). Lenders are also required to inform you in writing of any change in ownership of your debt within 30 days of the transfer. If your mortgage is backed by Fannie Mae and you do not know it, your lender could be in violation.
In short, there is no functional difference between loans provided by Fannie Mae and loans provided by Freddie Mac. Both agencies work with lenders to purchase mortgages from lenders so that the lenders can in turn use the liquidity (cash) to lend more money to more homeowners. In essence, this means the loans purchased by either agency are fundamentally the same. There is no noticeable difference to the homeowner; in fact, most homeowners are not aware that their loan is backed by one of the two agencies (although the Truth in Lending Act requires you to be notified whenever ownership of your debt changes hands).
Yes, they can and frequently are. FHA and VA loans are not really loans; they are instead guarantees on the loans themselves, which are provided by private lenders. These lenders include savings and loan institutions, banks, credit unions, and other lending companies. Fannie Mae and Freddie Mac purchase the loans themselves, and the loans they purchase are the mortgages issued by the private lender itself. The VA or FHA guarantee accompanies the loan but is not what is being purchased.
The timeline involved in a Fannie Mae foreclosure varies based on the circumstances of the deal. All Fannie Mae purchases go through asset managers, so workload often plays a huge part in the timeline. Additionally, Fannie Mae often accepts as many bids as it can, so that the maximum return on the original cost can be recouped (since the mortgage essentially was purchased with taxpayer dollars, the agency wants to ensure as much loss mitigation as possible). Bidding wars are not uncommon, and additional bids can increase the timeline. With that being said, offers are usually accepted or declined within 1-2 weeks.
No, Fannie Mae does not pay for repairs on a foreclosure purchased from them. FNMA does not make repairs or renovations; all foreclosure purchases from this agency are sold "as-is", meaning you are responsible for securing funding to make the repairs yourself. If the property is listed as a HomePath Renovation Mortgage-eligible property, you can apply for funding that allows you to finance up to 35% of the completed value of the home (no more than $35,000) for light to moderate renovations and repairs. You can also obtain a FHA 203(k) home loan which assists with financing renovations to a property.