In understanding how to buy a Fannie Mae foreclosure you need to understand who is Fannie Mae and what they are all about. Fannie Mae is a shareholder-owned company that works to make sure mortgage money is available for people in communities all across America. They do not lend money directly to home buyers. Fannie Mae works with lenders to make sure mortgage funds are available for individuals to purchase homes.
Fannie Mae stock (FNM) is actively traded on the New York Stock Exchange and is part of the Standard & Poor's 500 Composite Stock Price Index. In 1938, the Federal government established Fannie Mae to expand the flow of mortgage money by creating a secondary market. Fannie Mae was authorized to buy Federal Housing Administration (FHA)-insured mortgages, thereby replenishing the supply of available money. In 1968, Fannie Mae became a private company operating with private capital on a self-sustaining basis. Its role was expanded to buy mortgages beyond traditional government loan limits, reaching out to a broader cross-section of Americans. Fannie Mae receives no government funding or backing, and they remain one of the nation's largest taxpayers.
When all repayment options have been exhausted between the mortgagee and the mortgager on a home that Fannie Mae has participated on, the home moves in to foreclosure. On many foreclosed homes Fannie Mae retains ownership. After ownership has been established by Fannie Mae they become a “home owner” trying to sell their home to someone who is looking to buy a home ….. a very simple process with no hidden agendas. In many cases, Fannie Mae will turn the handling and marketing of these properties over to real estate agents such as Banner & Associates with Allen Tate Realtors. It is the realtors responsibility to provide Fannie Mae with a “Broker’s Price Opinion” to Fannie Mae as well as repair recommendations. A certified appraiser employed directly by Fannie Mae will also offer a valuation of property to Fannie Mae. With all repair assessments and valuations in hand Fannie Mae then decides how to remarket the property. A standard “Offer to Purchase” contract has to be filled out and signed by the buyer, a pre-qualification letter from a reputable lender must accompany the offer to purchase. Fannie Mae also requires that their own Purchase Addendum be included as part of the Offer to Purchase Contract. There is specific language that must be included on the Offer to Purchase Contract that states that the addendum is part of the contract. The exact language is available to you in the Addendum directions. The addendum directions must also be signed by the buyer’s agent as well as the buyer. Please read and understand what the addendum represents in your Offer to Purchase.
You will see as you read through the addendum, Fannie Mae is protected from any future issues involving the condition of the home since they have not lived in it. In North Carolina Fannie Mae is exempt from providing to the buyer a North Carolina Property Disclosure Statement because it is a foreclosure and they have no knowledge of what has or has not been done to the home in the past. In general Fannie Mae makes every effort to provide their homes for resale in reasonable condition but the buyer has all of the responsibility to inspect the home and accept the home, “As Is”, in it’s present condition prior to closing. All initial offers must be in writing, but verbal negotiations are acceptable. Once Fannie Mae and the buyer agrees on a selling price the buyer has 10 days to complete all inspections and respond to Fannie Mae on their intentions to move forward with the purchase of the home or rescind their offer to purchase. If the buyer accepts the property then the rest of the buying/closing process continues and Fannie Mae considers the home “Under Contract”. Although Fannie Mae prefer cash offers, many financing options will be considered. Down payment assistance programs, seller paid closing costs and home warranties are often considered. Remember, everyone’s goal is to provide affordable housing to owner occupant. Fannie Mae encourages investors to purchase foreclosed homes but the requirements to purchase are slightly different that that of an owner occupant. An investor is required to provide 10% of the purchase price in earnest funds when making an offer to purchase. If an investor purchases a Fannie Mae Foreclosure there is a Deed Restriction placed on the property that the buyer/new owner can not resale the property for more than 120% of the purchase price for a period of three months.
If you have any questions about purchasing Fannie Mae homes please contact any member of the Banner Team and they will be glad to assist you in any way.
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