Fannie Mae, Freddie Mac motivated to sell
WASHINGTON — Looking for a deal where the home seller pledges in advance to contribute potentially thousands of dollars to your closing costs? Here are two of the largest and most motivated sellers of foreclosed homes in the country:
Fannie Mae and Freddie Mac.
They now have massive numbers of properties taken back through foreclosures. Fannie Mae had 153,549 at the end of the first quarter. Freddie Mac owned 65,174. That's nearly 220,000 houses for which they need to find new owners.
To move that bulging inventory, both companies have time-limited sales campaigns with significant incentives for new owner-occupant purchasers — no investors — and even extra cash for real estate agents who bring buyers to the table.
Both Fannie and Freddie are offering to pay up to 3.5 percent of the price of the house toward buyers' closing costs; plus they'll hand over a bonus of $1,200 to participating real estate agents. Fannie's program covers properties that contracts are accepted on and close by Oct. 31. Freddie's sale requires contracts by July 31 and closings by Sept. 30.
Fannie's program even offers mortgage money to help finance purchases, sometimes with as little as a 3 percent down payment. The company also has what it calls a "renovation mortgage" option that provides additional mortgage amounts to cover fixups.
The foreclosed properties are listed with photos and descriptions at HomePath.com (Fannie) or HomeSteps.com (Freddie) in an easily searchable format. They range from expensive detached homes to low-budget condos, cottages and suburban tract townhouses.
The summer clearance sales are part of rapidly accelerating efforts by both companies to get ahead of the tidal waves of foreclosures flowing into their portfolios in recent months. In the first quarter of this year, Fannie Mae acquired 53,549 properties. But during the same period, it managed to sell 62,814 houses — a record number that produced a net outflow. Freddie Mac also sold more foreclosures than it took in during the first quarter, acquiring 24,709 houses while selling 31,628.
Both companies are targeting only buyers who plan to live in the homes — rather than non-occupant investors who want to flip or rent them out — as part of a larger neighborhood real estate stabilization effort.
Keep in mind that these are foreclosed properties and some have been abused by previous occupants.
And although foreclosures generally sell for less than nondistressed houses, understand that both Fannie and Freddie are in the business of maximizing returns on assets for their federal creditors. Do not assume the listing prices are deep-discount giveaways. Compare prices and values before bidding and negotiating — just as you would with any other real estate purchase.
Kenneth R. Harney can be reached at [email protected]