FNMA foreclosures - a Smart Choice for The Homebuyer
Fannie Mae Foreclosures are properties that have been taken back by the FNMA.
The FNMA (Federal National Mortgage Association) was founded during the Great Depression to stimulate the real estate market. FNMA rules allow lenders to reinvest their assets and create more mortgage loans. FNMA also helps borrowers refinance their existing loans.
Fannie Mae's mission is to provide liquidity, stability and affordability to the housing market. Fannie Mae is not a direct lender. Rather, it operates in the secondary mortgage market. This means FNMA works with mortgage brokers, bankers and other primary mortgage partners to ensure they have sufficient funds and financial backing to lend to home buyers.
FNMA’s participation in the housing industry has grown to the point where it owns over half the mortgages in the United States, which equates to more than half a trillion dollars in loan value.
Fannie Mae Foreclosures
As a secondary supporter of a large volume of home loans, FNMA also experiences a relatively high share of loan defaults. At any given time, FNMA may hold – rights on more delinquent mortgages than any individual direct lender. As such, Fannie Mae foreclosures comprise a high individual percentage of all foreclosed homes, including government foreclosure listings. These cheap homes for sale are usually sold through realtors, through a listing broker, or through an asset manager who works with a listing broker on FNMA's behalf.
As with most government foreclosure homes, FNMA-owned properties are comparably cheap homes for sale. (This is also the case for VA foreclosures and Freddie Mac foreclosures).
FNMA relies on a BPO (broker pricing assessment) to determine the asking price on a foreclosed property. Part of the process FNMA follows to sell a home consists of determining if these government foreclosure homes will be sold as-is (for a lower price) or if FNMA will investment to improve the property prior to listing, in order to increase the initial asking price.
More often than not, Fannie Mae foreclosures are sold as-is. While the FNMA does make strong efforts to bring these cheap homes for sale into good condition prior to the sale, as with any sale, Fannie Mae encourages home inspections prior to a home purchase.
Financing Fannie Mae Foreclosures
These government foreclosure homes can be bought with a minimal down payment, potentially as little as 3% down. Loans are made through select lenders and a pre-qualification letter is required when submitting offers on government foreclosure listings.
Special Incentives for Buyers of Government Foreclosure Homes
To encourage quick sales, Fannie Mae foreclosures may be sold through buyer incentive programs. These programs may support loans with very low fees, very lenient terms for qualification and very low rates. In addition, Fannie Mae foreclosures may not require an appraisal or PMI (private mortgage insurance). This could save a homebuyer up to hundreds each month!