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Purchasing Fannie Mae Foreclosures

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By : Karim El Sheikh    99 or more times read
Fannie Mae was created to purchase mortgages and package them on the open market as mortgage-backed securities to investors. When the financial crisis and housing market bubble burst, the government took over Fannie Mae. Fannie Mae acquires title to the properties that lenders foreclose on when borrowers default and offers those homes for sale. The Fannie Mae properties are listed with local Realtors® who market them by placing them in the MLS and advertising them on the Internet, in newspapers and other places.

Why Fannie Mae Foreclosed Homes are Good Investments?

Fannie Mae sells the homes at deep discounts. Fannie Mae does not make repairs to the homes so you are advised to get your own inspections. Fannie Mae prefers cash offers, but you can get your own financing or Fannie Mae offers financing programs to buyers who intend to purchase homes as their primary residences or second homes with as little as 3 to 5 percent down payment.

Investors can also purchase and obtain Fannie Mae financing on foreclosed homes. However, investors must put a 10 percent down-payment down, and they cannot resell the property for at least 90 days after closing. Investors must stay within 120 percent of your purchase price when flipping the property. Fannie Mae also offers loans for purchase and rehab to all qualified buyers.


Through Fannie Mae’s HomePath financing borrowers can take advantage of the following:

  • Low down payments between 3 and 5 percent

  • No appraisal

  • No private mortgage insurance required

  • Seller contributions to closing costs

  • Flexible mortgage products ranging from fixed rate, adjustable rate and interest only mortgages are available

  • Waiver of many condo project requirements

  • Combination purchase and renovation loans

Information is available on the Internet or at the Fannie Mae HomePath website if you are interested in the Fannie Mae HomePath financing programs. Otherwise, talk to your mortgage broker or lender to find a loan product that works for your financial situation.

Making an Offer

For the first 15 days, offers from owner occupant buyers have priority on Fannie Mae foreclosures. Offers from investors will be considered after the first 15-day “First Look” list period. An earnest money deposit is required. Check with your Realtor® as to what is customary. Also, you will need to present proof of funds if you are paying cash or a pre-qualified letter from your lender if you are obtaining financing.

Fannie Mae uses a residential purchase contract specific to the state real estate laws where the property is located and has its own contract addendums. Your Realtor® will be able to download the special Fannie Mae addendum forms right from listing on the MLS or they can be obtained from Fannie Mae’s listing agent.

Fannie Mae must disclose any hazards they are aware of at the property. However, since Fannie Mae acquires the property through lenders who have foreclosed, they may not be aware of problems with the property so it is recommended that you have a home inspection to find out the property condition.

Your Realtor® will write and present the offer to Fannie Mae on your behalf. Expect it could take a few days and up to a week for the Fannie Mae representative to get back to you. If there are multiple offers on the property, Fannie Mae must advise your Realtor®. They can either counter to one or both offers. Cash offers always have priority so you need to be competitive when there is a multiple offer.

Many times the Fannie Mae homes sell for full asking price or over asking when there is a multiple offer. If your offer is selected, you must comply with the contract contingency periods. It is also recommended you purchase a home warranty plan, which is like an insurance policy in case something breaks in the home after closing. There are exclusions so you need to read the home warranty plan carefully.

Fannie Mae foreclosures offer investors/buyers the opportunity to purchase a home at bargain prices anywhere from 30 to 50 percent off market value so you know you are getting a property with built-in equity. If you do find a Fannie Mae property that you are interested in, you should make an offer right away because there is a lot of competition for these homes right now. They sell quickly, and you don’t want to miss such a bargain opportunity! is the top source for all real estate investment properties for sale. Find foreclosures, preforeclosures, short sales, rent to own homes, and more.

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