How to buy a Fannie Mae REO

Hey. Good morning. It’s Todd Miller here. It is the 15th of January. It’s a Friday so it’s the end of the week. Yay! I’ve got some exciting news. I found out something this week that will really help if you’re having an issue getting an offer accepted specifically with Fannie Mae properties. OK?

Now most of you already are aware that when you write up an offer FHA, everybody else has a better shot meaning conventional offers and cash offers. They have a better chance of getting finances. Everyone is afraid of what’s going to happen with the appraisal and that’s a big one is the appraisal because what happens is let’s say you write the offer for 120. It was listed for 100 or 110 and the appraisal comes back in 100. Well, either your person has to come in with the extra money or the seller has to lower the price.

So what the sellers are all getting smart is they’re saying upfront, if you want to really offer this amount, you have to show you can come in with money and they’re not going to reduce the price. I think that’s the right thing to do really.

If you’re willing to pay that much, you should write an offer for a ridiculous amount, hoping it doesn’t appraise and you will get it for less. So on Fannie Mae properties specifically, there’s this cool thing that is not widely known. OK?

Now on the Fannie Mae property, you will know because it says HomePath. It says HomePath in there. This is my recommendation. When you sit down to write the offer, write the offer with HomePath financing, not FHA.

As a general rule, we don’t consider that a type of financing but it is. HomePath is a type of finance. So it’s like FHA. It’s like VA. It’s HomePath. It’s a whole different program only used on Fannie Mae properties and only by a couple of lenders. Everyone can’t do HomePath financing.

So if you’re trying to go to Bank of America, Wells Fargo, they don’t have the program and if you try to use your buddy the mortgage guy, they don’t have the program either. This is why this is huge and you need to do this. Let’s say your buyer really wants that house or you’re the buyer. You really want the house and you really have looked at the numbers and said, “Look, I will pay 120. I will get a loan for 120 and I will put my 3.5 percent down just like in FHA.”

HomePath financing, no appraisal. None. There is none. You don’t get an appraisal. If you’re willing to pay that and get the loan, they will give you a loan. The reason they do it is because all the HomePath loans are going to go back to Fannie. They’re going to service the loans and they’re going to move the property so it’s a win-win. It is great so you will be able to get the property.

Head of FHA offers, assets managers are looking at this. They’re aware of it. They ask all the time when we submit the offers. Are any of these HomePath? We typically say no. OK?

Now the biggest issue is most people don’t have a clue. They’re set in that old mindset. They don’t want to get an appraisal. They don’t want to have to hunt around it to figure out where to go. I’m going to give you that information where to go. OK? I will give it to you a couple of times. I’ve got it right here. It’s very simple. You’re not going to find here in Las Vegas and really anywhere, you’re probably not going to find a local guy who can do it because only a few lenders can do this.

If you go to HomePath.com, that will give you the whole list. It will tell you everyone who can do it. The information I have here is from a mortgage company called Nationstar Mortgage. If you call this number 1-800-416-5010, call that number. They will give you the pre-qual, the whole thing. Use that to write your offers.

Now here’s the great thing. Let’s say your deal is falling apart. You mean you already made a mistake. You wrote an FHA offer for 120. It came back at 105. The seller is like, “Forget it. We’re not lowering it.” Your buyer is like, “I really want it.” You’re trying to negotiate it. This is what you do. You call that phone number 1-800-416-5010 and you say, “Look, we need to get HomePath financing on this property.”

They will finance your 120 for you. So if it’s falling out of escrow, they can save it. They can do it pretty quick. I’ve been told in as little as 17 days. Credit score requirement is what they told me that was 660. That may be the only issue. You may be able to qualify for a loan, FHA loan for – because they have a 600 credit score but not for a HomePath. That’s really the only downside is it’s a higher credit score loan but there’s definitely opportunity with this program.

Now, onto the second half because you’re saying, “Well, can it get better?” The answer is yeah, it can get a lot better and this is how. You’re already aware that on a HomePath or a Fannie Mae property, three days, for the first three days they don’t look at any offers. Then on the third day, they look at all the offers. OK?

But they wait 2 weeks and they wait 14 days before they start entertaining investor offers. Now the issue with investors is you have to do one of two things. Investors either have to get cash or typically 25 percent down. Those are the biggest loan programs out there with the investor 25 percent down program and then in cash of course.

But what if you’re an investor and you want to buy a bunch of properties? You don’t have cash to buy five or six. You have the cash to buy one but you want to get more. Is there a way you can do that without putting 25 percent down? Because if you got 100 grand, you want to buy four properties using traditional financing [0:05:51] [Indiscernible] $25,000 down, you can buy four $100,000 properties and that’s it.

Well the cool thing is with HomePath, you can buy with only 10 percent down. Investor financing, 10 percent down. It’s a sweet deal. Same thing. You’re not dealing with an appraisal. So you could step up with the investor 10 percent down HomePath financing. You have a good shot of being out cash offers. Why is that? Because if somebody has offered 100 grand and you’ve offered 105 or 110 with HomePath, they’re going to know, look, we know this is going to likely close. It’s probably the same as cash. If you already have a preapproval, pre-qual, say, “Look, we’re preapproved for HomePath.” Then the asset manager at Fannie Mae or the outsourcer or asset manager is going to look at that and go, “Look, I’ve got a HomePath product. Fannie Mae is really pushing this and it’s a good product.”

So you’ve got two options here. So here’s a recommendation. Writing up offer on Fannie Maes. If you’re not going to do it cash, look in the HomePath. Go to the HomePath.com website and look at all the lenders. You can pick one on there or you can use this one Nationstar, 1-800-416-5010. We met with them. They came in the office. Everything they said sounded great. Their systems sound like it all works and it’s the remote thing. You’re not going to have a person sitting there across the table. There are just not enough of them out there to do that.

So that’s my sort of recommendation for the day. There’s a lot more Fannies coming on the market and so this is going to be something that’s viable for the rest of the year. We’ve been seeing Fannies, Fannie products come in everyday to us and this is just a tool to help you get your offer accepted.

That is my update for the day. I hope that you have a great weekend and I will be giving you a new update next week. Thanks a lot.