"Fannie Mae" is the nickname for the Federal National
Mortgage Association.
Although it has the "Federal" name in its title, it's
actually a separate, chartered corporation that operates in
the secondary mortgage market.
In this article, I'll give you the background and history
of Fannie Mae, describe typical properties, and show you
how to buy those properties for investment purposes.
Fannie Mae's Background
Fannie Mae is a federally chartered organization. Its
purpose to expand affordable housing and bring global
capital to local communities in order to serve the U.S.
housing market.
Essentially, Fannie Mae operates in America's secondary
mortgage market to ensure that mortgage bankers and other
lenders have sufficient funds to lend to home buyers at low
rates.
Along with Freddie Mac, it's the main secondary lender in
the country. As the Fannie Mae web page states, "Our job is
to help those who house America."
The History of Fannie Mae
To give you a historical perspective. Fannie Mae was
created by President Franklin D. Roosevelt and Congress in
1938. At that time, there wasn't a consistent supply of
mortgage funds. As a result of the Depression, millions of
families risked losing their homes or couldn't become home
owners.
So, the federal government established Fannie Mae to
address this need. Its aim was to "expand the flow of
mortgage funds in all communities, at all times, under all
economic conditions, and to help lower the costs to buy a
home."
In 1968, Fannie Mae was re-chartered by Congress as a
shareholder-owned company. It's funded solely with private
capital raised from investors on Wall Street and around the
world.
Types of Fannie Mae Properties
These include all forms of single-family homes such as
detached homes, condos, and town houses. The inventory
often includes homes in modest to more expensive
neighborhoods.
All Fannie Mae homes are sold in an "as-is" condition.
These conditions range from good to poor and include
"repo's" which may or may not be in poor condition. Note
that Fannie Mae sometimes fixes these properties up in
order to get a higher price; at other times, it simply
leaves them in the same condition.
In order to obtain one of these properties, Fannie Mae
secifies that you go through a local realtor.
Real Estate Agents are required to list these properties on
the local Multiple Listing Service. Any local agent can
show you a property and make the offer for you to Fannie
Mae. You can find further listings of Fannie Mae Properties
is available online at http://www.mortgagecontent.net
Making Offers to Fannie Mae
The process is the same as with conventional deals. Fannie
Mae can accept or reject your offer or make a
counter-offer. Typically, there are several rounds of
offers and counter-offers. A benefit of negotiating with
Fannie Mae is that, unlike HUD or VA negotiations, you're
able to add contingencies and other conditions to your
offer.
Here are two examples of contingencies:
Example 1: You can ask for a professional home inspection
after the offer is accepted.
Example 2: You can negotiate terms, down payment and
financing.
Note: Fannie Mae will not accept a contingency that
requires the prior sale of a seller's current
property.Source: http://www.fanniemae.com
In terms of financing for these properties, Fannie Mae
offers its own REO financing, but the terms are usually no
better than conventional sources. This means that buyers
may be able to get better terms if they come into a deal
with outside financing.
Opportunities for Investors
Fannie Mae properties may present good opportunities for
you as an investor, particularly in the area of
foreclosures. To operate effectively in this market, it
pays to know the ins and outs of the federal bureaucracy as
well as the latest regulations.
Key Point: Keep up to date on the Fannie Mae market through
your own study of its regulations and with the help of an
experienced realtor.
Jack Sternberg
----------------------------------------------------
Jack Sternberg is a nationally recognized expert on real
estate investment and the creator of the renowned "Buyers
First Program" who's been in the business for more than 30
years. Sternberg's deals have totaled over $750 million and
he's been to the closing table more than 1,500 times. For
more, visit http://www.askjacksternberg.com
No comments:
Post a Comment