fannie (29)

More times than not it seems as if Fannie Mae REO’s are priced extremely high in CA, compared to list prices of other REO properties. Sometimes understanding why something is done is half the battle, and it helps ease the frustration of completing a excellent BPO only to have the client list the property 20K higher than suggested list price.

A few months ago, I had the opportunity to sit in on a conference call with Fannie Mae representatives and it all became clear as to why their properties in CA are listed so high.

The current mission of Fannie Mae is to bring about neighborhood stabilization, and preserve neighborhoods. In conjunction they want to lessen losses; however one cannot be accomplished without the other. So what does this have to do with overpricing homes in California?

First and foremost, California is considered to be a premium state to Fannie Mae. (What this means, I don't know ,your guess is as good as mine, but my assumption is this: California leads most other states when it comes to appreciation and migration of a state to live. Maybe it dates back to the Gold Rush Days. LOL

With Fannie being the leader in owning mortgages, chance are that for every one Bank Owned home or Foreclose on a street, they own 10-12 others on the same street. So it is of benefit to both Fannie Mae and the neighborhood for the REO home to be priced higher. The hope is to be less of a shock factor for those other ten - twelve performing notes on the block, so that they keep performing and paying their mortgages. (This is a must to bring about stabilization.) I'm going to go out on a limb here and predict that in the near future you will see less homes go on the market, meaning there will be FC's of DIL’s you don't even know about and previous owners will remain in homes as renters until they can buy back the homes .

Fellow agents now that you understand, don't get frustrated, keep doing your BPO's and just remember, the comps don't lie, and true market value is what a ready, willing buyer, is willing to pay for a home. I have been quite surprised by my last two list prices, as they have been rather aggressive. I’ll keep you posted.

Let me leave you with these word of wisdom. What’s good for Fannie, may not be good for Saxon, or Aurora, and ultimately not good for you. Stay tuned for my next blog and I'll explain.

Remember this, “ If your going to thrive in any market, knowing where it is going, and how to position yourself will be key for your success”

Very Truly Yours,

Jonathan Burgess

Coed 3 Real Estate

Broker/CEO

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RISMEDIA, January 21, 2010—(MCT)—In hopes of reviving one of the nation’s hardest-hit condominium markets, the giant mortgage backer Fannie Mae is making it easier for people to buy Florida condos that may not have met previous lending standards.Fannie Mae has started giving certain condo complexes in the state “special approval” designations, a sort of stamp of approval, even when the properties don’t meet one or more of the established rules relating to delinquent fees, financial reserves and percentage of owner-occupied units.Florida is the only state getting the special reviews, which are a first for Fannie Mae, officials with the government-backed corporation recently said.Teams are already reviewing complexes and granting the special approvals—which are a green light for mortgage lenders—in cases where the projects are considered stable even though they might violate a Fannie Mae lending standard. For example, under current rules, a project doesn’t qualify for Fannie Mae-backed mortgages if more than 15% of the unit owners are behind on their association fees—but a review team might decide to waive that rule, opening that complex to a much larger pool or prospective buyers.“This new initiative is geared toward providing maximum support for Florida’s distressed condo market as we continue to provide liquidity to the housing market more broadly,” said Karen Pallotta, executive vice president for the secondary-mortgage giant.The new reviews were prompted by the fact that home buyers, lenders and real-estate agents have been avoiding condos because many of the complexes do not meet existing lending criteria. With little or no financing available, condo prices have crashed, with units attracting mostly cash buyers. Fannie Mae had already been granting exceptions to its condominium guidelines, but only on a case-by-case basis, when requested by lenders.Even though Miami’s condo prices have not fallen as sharply as those in Orlando, condo complexes in South Florida appear to be getting most of the new program’s early attention. Fannie Mae has given its approval stamp for mortgages on more than 50 condo complexes, all of them in the Miami area. Miami real estate agent Maurice Veissi, first vice president of the National Association of Realtors, said that the real estate organization was key in educating Fannie Mae about Florida’s collapsing condo prices. “Fannie Mae and Freddie Mac recognize that south Florida, and southeast Florida in particular, have been uniquely hit,” Veissi said. “Any time you get some relaxation of what were some stringent rules and regulations, that will affect the market to some extent.”Condo prices have fallen more in Orlando than in most U.S. metro areas. The median price for a unit in the four-county Orlando area in November 2009 was $55,000, down 21% from a year earlier. In comparison, Miami’s median condo price was $149,000, down 14%.Fannie Mae officials said they will be adding more complexes to their list of approved projects, which can viewed at www.efanniemae.com under “frequently searched pages,” as six employees review properties across the state. They will be taking into consideration the quality of each project’s construction and maintenance as well as the financial health of the owners association.Whether loosening lending criteria for condominiums is the right thing to do now is a valid question, said Craig E. Polejes, president of Florida Bank of Commerce. “The question is: If they’re looking to make exceptions on a case-by-case basis, what are the parameters of the exceptions?” Polejes asked. He said he was skeptical of any move to finance mortgages for condo units in complexes that had been converted from apartments. The overriding issues, Polejes added, should be the quality of the building and the creditworthiness of the buyer.A board member of one Winter Park, Fla.-area condominium project that converted from apartments several years ago said only one-fourth of the residents were paying their fees, forcing the owners association to increase the fees to make mandatory insurance payments. The board member, who spoke only on condition of anonymity because of a pending foreclosure action, said he hoped something could be done to help revive the local condo market.Polejes said qualified buyers should not continue to be precluded from purchasing units in viable condominium complexes simply because the property doesn’t meet every single standard to allow financing. But he added: “If they start relaxing down payments, incomes, credit scores—that’s problematic.”Story by Mary Shanklin(c) 2010, The Orlando Sentinel (Fla.).Distributed by McClatchy-Tribune Information Services.
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FANNIE MAE ADOPTS NEW REO POLICY

From DS News- Author: Brittany DunnFannie Mae Adopts New REO Policy01/06/2010 By: Brittany DunnIn an effort to expedite REO sales, Fannie Mae has adopted a new policy. As part of this policy, Fannie Mae may accept offers to purchase homes it has repossessed withoutnotifying loan servicers, and loan servicers may be required to reimburse Fannie Mae for a loss if it turns out the original mortgage on the home did not meet its eligibility or underwriting requirements, Inman News said Wednesday.Previously, if there was a question over whether a mortgage on a repossessed property met Fannie Mae’s requirements, servicers were given 15 days to turn over loan files for review. Rather than reimburse Fannie Mae for an incurred loss, loan servicers had the opportunity to try and find a better offer for the property or buy it themselves.The rules have changed, though. In a recent announcement to loan servicers, Fannie Mae said it has implemented a change regarding assurance reviews. When the company is notified that a property has beenacquired, it will begin the disposition process by obtaining opinions on the market value of a repossessed home and list it with a real estate broker.“When Fannie Mae receives an offer to purchase a property that is also subject to an underwriting or servicing review, Fannie Mae may accept the purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review,” Fannie Mae said in its announcement. “If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the lender will be required to fully reimburse Fannie Mae for its loss.”These changes come after recent reports from Fannie Mae showing an increase in the acquisition of foreclosed properties and an escalating rate of seriously delinquent single-family home loans.According to its most recent quarterly report, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year and sold 89,691 REO properties during the same period. However, at the end of September Fannie Mae still had 72,275 REO properties on its books, marking a 7 percent increase year-over-year.Furthermore, Fannie Mae’s monthly summary for November showed notable growth in seriously delinquent single-family home loans held or guaranteed by the company. Up from 1.89 percent in November 2008, loans three or more months behind in payments or in the foreclosure process soared to 4.98 percent in November 2009.
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Fannie Mae and Freddie Mac propose New Rule Changes

Because of ongoing weakness in the real estate sector, the institutions that have filled the vacuum left by lenders, have run into trouble... they need to change the rules.In order to assure that mortgage originations continue, its become necessary for FHA and Fannie Mae to reduce risk. The FHA proposes to increase the net worth requirements of FHA-approved lenders, strengthen lender approval criteria, and make lenders liable for the practices of their correspondent mortgage brokers.Lender Approval1.FHA-approved Mortgagees must assume liability for all the loans they originate and/or underwrite2. Mortgage brokers will no longer receive independent approval for origination eligibility. The FHA-approved mortgagee will have to assume responsibility and liability for the FHA-insured loan underwritten and closed by the approved mortgagee.3. FHA has required approved mortgagees have a minimum net worth of $250,000. To assure financial vialbility in the future, the proposed rule would require mortgagees maintain a minimum net worth of $1 million in the first year and at least $2.5 million within three years.New Credit Policy Rule Changes1. Mortgagees will be required to submit audited annual financial statements to the FHA.2. Proposed rules to establish new requirements for seasoning, payment history, income verification, and demonstration of net tangible benefit to the borrower3. A cap maximum on LTV at 125 percent.Appraisals Rules May Change Too1. An appraisal will be required in all cases where a borrower wants to add closing costs to the transaction.2. Mortgage brokers and commission based lender staff are prohibited from ordering appraisals.Fannie Mae Also Changes The Rulesloans for those who can afford it and prove they can keep itData now shows that buyers with lower FICO scores/excessive debt defaulted at rates nine times higher than those with solid FICO scores and more manageable debt load. So beginning Dec. 12, Fannie Mae will reject borrowers who have at least a 20% down payment but a credit score below 620.Whats it Mean For Buyers and Sellers.1. Many buyers that were pre qualified may now find they no longer qualify for the price range they had been shopping.2. Tighter financial requirements may mean they have to settle for less house.3. Buyers expectations may have to adjust downward, given stricter financing rules.4. Seller pricing strategies will adjust, buyers will have more trouble meeting new debt-to-income requirements.5. We should see more private equity come into the market to fill the vacuum and possibly more seller financing.6. The higher end may suffer as buyers that could have stretched into more home, no longer can.7. It will hurt the younger person with 20% down, but no credit history.* Some of these rules may be applied at this writing. The FHA and Fannie Mae web site will have updates and changes to proposals.*Photo thanks to Queens University CanadaThanks for Readingwww.yourpropertypath.comRelated ArticlesFHA Losses: What it MeansMortgage Bankers Weekly Update: Loan Apps DeclineNAR: Existing Home Sales ReportShould You Stop Paying Your Mortgage
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Hello REOPRO,This is my first blog post here, so I am just learning this system, more on that later.So, has anyone got started doing the Fannie Mae outsourced listings, and then moved to being a direct Fannie Mae vendor listing agent? I have done well with outsource companies and I am just starting to consider selling direct for Fannie Mae.I am an agent; soon to be a broker associate for a large firm West USA Realty and I have my own small team. I understand the Fannie Direct listings are Broker specific. There is an agent with my firm but in a different office (same designated broker) selling for Fannie direct I believe. Does anyone know if another agent in my company selling for Fannie will preclude me from getting a Fannie Mae direct listing account?And, like I said 'just learning this system' wow all the blogging and techno stuff is enough to make you crazy these days! Can't live without out, can't take a day off because of it! Hope to hear from members soon, looking forward to meeting new people, and learning new stuff.Jessica Klein, Realtorhttp://www.RealEstateCopa.com
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Fannie Mae Gets Into The Home Rental Business

Good News for foreclosure victims. Some homeowners will get an option to rent the home that they just lost. Its possible to stay in your home as a renter. Fannie Mae will give borrowers facing foreclosure an option to rent their homes for a year.Foreclosed home owners will be able to sign a one year lease, with possible month to month extensions with Fannie Mae. Good for everybody.Homeowners get a little relief and are able to remain in their homes for a year or more. This will buy them the time they need to regroup. It will also help keep neighborhoods from going missing. Rather than rows of abandoned homes with all the crime and destruction that vandals create.. Neighbors that have not lost their homes will not see more equity loss as squatters and criminals move into vacant homes. The banks are reluctant landlords and they are allowing property to decline.It will keep supply off the market for at least another year and that is good for all the handlers, Fanne Mae because it can put off the expense of a foreclosure, the banks because less supply will protect equity in homes they are off loading and everyone one because it will help stabilize home prices. I dont think we can have a strong recovery without real estate.To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. In many cases, rents will be less than the mortgage because properties that are now worth far less than they originally paid.The downside is seems to be that homes that might normally have been foreclosed and sold will now remain owned by taxpayers. Homes, according to Dr Shiller have risen faster in the last few months than he has ever seen. Perhaps Fannie will profit a little while doing a good thing for families that must be a little traumatized by it all.And even if prices don't rebound quickly. Fannie Mae gets rental income, avoids foreclosure expenses gets to helps people.Thanks for Readingwww.yourpropertypath.comRelated ArticlesThe Fed and The Housing RecoveryBanks and the Housing RecoveryFHA has New Rules
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I've prepared this blog with the hope that it will educate and streamline the process for First Time FHA Buyers and their agents when writing offers on Fannie Mae REO's; of which we should see a large supply in the near future.Our market has changed and is not a traditional market any longer. As Realtors/Brokers & buyer's we all must adjust. Adjust to the fact that FANNIE Mae’s reo RPA supercedes all State RPAs (Residential Purchase Agreements). Fannie is also exempt from normal closing cost that a seller would be required to pay, Such as Title, Escrow, City/County X-Fer Taxes.1). So what does this mean to you as the buyer or buyers agent? It means you cannot assume that Fannie is going to pay for it even if you put it in your state RPA. You have to ask for it to be paid, and expect that total amount to be included as a portion of the total max of closing cost that the seller, Fannie will pay.It's an art to writing the perfect offer; however what is more of an art and much needed in this market, is educating your buyers. Sellers normally take the best offer, and Fannie Mae is no different. The best offer may not always be the highest offer and I have seen a lot of this lately. Buyers and their agents often question or wonder why their higher priced offer are rejected and lower offers accepted by the banks. The pecking order is CASH (We all know is King), Conventional, FHA, and Then VA. Why? It doesn't take rocket scientist to figure this out. We all know cash offers can usually close in 15 days and they are less likely to fall out. Conventional buyers usually have more money to put down and the lender guidelines/requirements for financing aren't deal breakers. FHA, less money down, and lender required repairs could be deal a breaker for a seller selling a property AS IS. VA, will just multiply FHA x 2 or 3 with no money down... If you were selling your property, what would your pecking order be in a declining, unstable market? Time is money, and if a property is tied up for 30-60, 90 days and falls out of escrow, a lot of money is loss. These days the banks are currently in the business of minimizing losses. We may see this change in an appreciating market, but not in a declining unstable market.2) So does this mean that FHA buyers won't get a chance to buy Fannie REO's at or near Rock Bottom Prices?No absolutely not. It means that buyers agents have to put together solid offers. Writing a contract 10 to 15K over list price on a Fannie Mae REO so that closing cost can be paid by the seller is an example of a poor offer, (Agents are u looking at comps when u do this, is this really in the best interest for your buyers?) Every Fannie Mae REO property has an extensive Broker Price Opinion (BPO) also know as a CMA, completed the listing agent as well as an appraisal. When the price is set, they are well aware of the value a property will appraise. Fannie Mae is also provided a monthly marketing update in which they are given statics to support lowing, increasing or mainting list price of the property. Writing an offer over the appraised value means the FHA deal is more likely to fall out should the appraisal come in low.When you see HomePath Financing! That’s a good thing it means the property will not have to be appraised (Fannie Has an Appraisal On File) and can be sold at list / offer price should you come to terms; however you have to use an approved Home Path Lender. A good way to go should this opportunity present itself.3) How do I present my best offer the First Time?Buyer's make sure you are Pre-Approved (preferably an institutional lender) Not Pre qualified. It’s also a good idea to show good faith by putting down a healthy Earnest Money Deposit (EMD). $1000.00 deposit with 3.5% down on a 150K is a poor example. I would recommend $2,500 to $5,000 if you want your offer to appear strong. When you read a RPA you can tell a lot about a buyer by their EMD. Cash offers are required to put 10% down as a EMD. As an REO listing agent I can only present to my client what you give me.If your a buyer or buyers agent that is doing FHA financing because you don't want to exhaust your savings account, show me!! Along with your offer and EMD your agent should be also including POF in your accounts. If you don’t tell me this I have no way of expressing or showing my client why your offer is just as strong as the next or maybe even better!! By doing this you increase your chances of direct competition with conventional offers, and you make it easy to select the best FHA offer.In closing I have just a few words of advice for agents writing offers.If listing agent instructions say preferred method to submit an offer is via Email. DO IT (In the subject line Enter Property Street & Buyers last name)Stack your Fannie offer as follows prior to emailing1) PRE APPROVAL LETTER2) EMD OR POF3) STATE CONRTACT4) FANNIE RPA (Signed/Initialed)If there is a Bank Addendum Attached in MLS. Have your buyer initial and sign it. Should your offer be excepted with the counter the terms can be written in and this streamlines the time it takes.Know that any lender required repairs after an agreement has been reached will be added to the top of the purchase price. Therefore do a complete initial walk through with your client before writing an offer, and ask for know repairs credits up-front if your comps don’t reflect the asking price with needed repairs. Remember the first offer received is not always the best offer so don't think you have to be first. Never write an offer without seeing the property, I actually check MLS and will request agents update their Dis Key's if an offer comes in too fast.This article is exclusive to Fannie Mae REO's; however the principals are universal and can be applied to all fields. Agents and buyers do your home work , comparable sales don't lie, so use them. My team of agents are trained to complete a CMA for buyer clients whenever their writing an offer. I would encourage others to do the same.Jonathan Burgess Broker/OwnerCode 3 Real EstateBroker/SAR/ IVAR/NARNFSTI Reo CertifedRes Net CertifiedReo Trans Certifiedwww.code3realty.comCode 3 Realty & Mortgage Inc.777 Campus Commons Drive Ste 200Sacramento CA. 95825Branch Offices In Tracey CA & Riverside CA.
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I came across a new problem today that may force more foreclosures. If you are in a condo and there are more than 15% of owners who are delinquent in their condo fee, you are out of the guidelines of Fannie Mae. So, no new loans and no refinance for any of the current owners or potential buyers. I would be interested to hear your thoughts on this.I think it just highlights how deep and pervading the mortgage mess has become.
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Here is a post from one of my AR collegues I thought it was worth sharing:Has Fannie Mae pulled their head out of their... sand box?What if I told you Fannie Mae is offering special financing if you buy one of their bank owned homes? Would you believe me? Well you should because it is true!Why does this benefit you? Well frankly... the terms of their offered financing is pretty darn sweet!The benefits of their HomePath program include:Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)You may qualify even if your credit is less than perfectAvailable to both owner occupiers and investorsDown payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employerNo mortgage insuranceNo appraisal feesFREE home warranty is included with the purchase.I recently wrote a blog about another local Sacramento Agency that is offering a similar incentive if you buy one of their bank owned homes. Read the blog now >>BUT the catch is they only have 2 or so homes available in the Sacramento Area to purchase.Here is the best part about this program... There are over 250 homes available in the Sacramento area right now that qualify for this program!Here are some other homes available in the Sacramento Area:Elk Grove... 46 homes available!Citrus Heights... 21 homes availableRancho Cordova... 16 homes available!Fair Oaks... 4 homes availableCarnichael... 14 homes available!and so on...Here is some more specific information about their guidelines:97% (3% down) for owner occupied financing with NO MORTGAGE INSURANCE!Why is this such a big deal?A typical FHA loan with an equivalent down payment (3.5% down) would require 1.75% of the loan amount to be paid upfront for a mortgage insurance premium. Then on top of your monthly payment (PITI), you would be charged .55% (of the loan amount) every year for ongoing mortgage insurance.Let me break this down so I don't throw too much loan lingo your way.. Here is an example mortgage insurance fees for an FHA loan of $200,000...$200,000 x 1.75 = $3500 You would be charged this amount at closing or you could roll this into a loan on a traditional FHA loan program for the upfront mortgage insurance premium.$200,000 x .55 / 12 months = $91.67 This means $91.67 would be added to your payment every month for mortgage insurance.With this special financing offered by Fannie Mae you could put .5% LESS down than a FHA loan and you do no pay ANY MORTGAGE INSURANCE! This really is a sweet deal!Do you feel like a little more sugar today? Wait until you see what they will do for an investor!90% (10% down) for non owner occupied properties with NO MORTGAGE INSURANCE!If you are looking for an investment home in Sacramento, you know that you will get a better return on your investment if you have less money in the deal. Right now with typical financing (actually offered by Fannie Mae for non-Fannie Mae owned homes), you should expect to put down at least 25%.Wow! So for example if you purchased a home for $150,000 (not owned by Fannie Mae), you would need to put down $37,500 plus closing costs. If you buy a home owned by Fannie Mae, you only have to put $15,000 plus closing costs. If that does not help you"sharpen your pencil" I am not sure what will! This is a really big deal!They even offer a renovation program that allows you to finance light renovations upfront and add it to the loan amount. So if you find a Sacramento Fannie Mae owned home that maybe has some vandalism issues (which many do), you can probably get a discount for the home and finance in the repairs that are needed to bring it back to livable condition!It is so nice to be able to report some good news to folks. It really has been a drag having to shovel through the bad news to try and find something good to report as far as guideline changes go!Here is a link to search for homes in your area >>We can offer this special loan program... so just give us a call and we can discuss this opportunity further!Happy Hunting!This blog by:Team NewingtonSacramento Mortgage Planners(916) 687-6868www.SuperiorLoanTeam.com
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