Government Foreclosures

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 Government Foreclosures

Government foreclosures offer great buying opportunities. The most well known are: Fannie Mae – FNMA, Freddie Mac – FHLMC, HUD – Housing and Urban Development, VA – Veteran’s Administration, and USDA – United States Department of Agriculture.

 

Federal National Mortgage Association, also known as Fannie Mae. 

Government foreclosures such as FNMA, Fannie Mae.
Government foreclosures offer great opportunities, such as FNMA – Fannie Mae.

We covered how to buy HUD foreclosures on the main page of this site. Here we will cover how to buy other government foreclosures.

Fannie Mae’s purpose is to provide dependable, across the board access to mortgage credit that is affordable throughout the U.S. perpetually so folks can rent, buy, or refinance homes.

They have an important part in the nation’s housing finance system – to give affordability, liquidity,  and stability to the mortgage market.

They ensure liquid access to money at fair rates to the many banks, mortgage businesses, and other lenders that provide loans to finance housing.

Fannie Mae backs lenders, and thus assists buyers in purchasing homes. If these buyers default on their home purchases, Fannie Mae takes back the property, and then lists it through Realtors, who, in turn list the homes on the market  for sale.

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Fannie Mae’s website is called HomePath.  This site will provide you with much more in depth information regarding the Fannie Mae home buying process, and it lists all of the available properties that Fannie Mae offers for sale.

Although, Fannie Mae may do some work on the home after it takes it back through foreclosure, it is an AS-IS property.  However, it may be possible to negotiate repair amounts needed along with your offer.

Once you have a good cash reserve,  a preapproval letter or a proof of funds in hand, and a Realtor lined up, you can begin the process of finding a Fannie Mae home.  The HomePath website lists what Fannie Mae homes are available in your area.

 

Once you have found a home or homes you are interested in, contact your Realtor, and let them know that you would like to see these homes in person.

Your Realtor does not need a special designation in order to sell Fannie Mae properties. All that is needed, is for the Realtor to register with FNMA on the HomePath website prior to submitting an offer for a client.

Fannie Mae has a First Look Period on their homes. This allows owner/occupants 20 days from when the home is first listed, to offer on the home. After the initial 20 day First Look Period, the home is open to all buyers, including investors.

An owner/occupant must take occupancy with 60 days of closing, and live in the home for at least one year.

If, and when you find a Fannie Mae home that you would like to make an offer on, just inform your Realtor. They will, in turn, provide you with the needed contracts to sign, and then place the offer for you online.  These contracts include a sales contract, a FNMA addendum, and an Owner/Occupant certification.

Fannie Mae through HomePath has a first time home buyer program where if you complete the HomePath Ready Buyer course, they will pay up to 3% of the value of the home towards your closing costs.

After the offer is placed online by your Realtor, it will take approximately 2-3 business days to get a response.  This is not a bid process. It is a straight negotiation with FNMA, and the listing broker, much like a standard offer on a privately owned home.  The response to the offer could be an acceptance, a counter offer, or a rejection.

If and when your offer is accepted, you will need to provide a proof of funds, or a recent pre approval letter from a lender, along with a copy of the earnest money check.

Once Fannie Mae is in receipt of all needed documentation, and once everything is filled out correctly,  Fannie Mae will send your Realtor  the signed documents, and the green light will be given to move toward closing.

It is a good idea at this point to schedule an inspection on the home.  It is the buyer’s responsibility to schedule and pay for an inspection, with your Realtor’s assistance, of course.

It won’t be possible to renegotiate the accepted offer at this point, but it would be possible to back out of the transaction based on the negative findings of the inspection, should you decide to do so. You would need to provide proof to FNMA.   A copy of the inspection report would suffice in this case.

Typically, it will take 45 – 50 days from date of accepted contract to close on a FNMA home if the buyer is using financing. If the home buyer is paying with cash, it will shorten the duration to approximately 30 days. This time period can change based on possible issues with financing, title insurance, title search, and other issues.

Get up to 5 offers at LendingTree.com

Federal Home Loan Mortgage Corporation, also known as Freddie Mac.

FHLMC - Federal Home Loan Mortgage Association aka Freddie Mac
FHLMC – Federal Home Loan Mortgage Association – aka Freddie Mac

 

Freddie Mac’s purpose, like Fannie Mae’s, is to provide dependable, across the board access to mortgage credit that is affordable throughout the U.S. perpetually so folks can rent, buy, or refinance homes.

They have an important part in the nation’s housing finance system – to give affordability, liquidity,  and stability to the mortgage market.

They ensure liquid access to money at fair rates to the many banks, mortgage businesses, and other lenders that provide loans to finance housing.

The process to buy a Freddie Mac foreclosure home is very similar to that of buying a Fannie Mae foreclosure home. The biggest difference is that the Freddie Mac website is called HomeSteps, instead of HomePath like the website of Fannie Mae.

Purchasers, through their agents of a Freddie Mac foreclosed home, must go through the HomeSteps website.

Your Realtor does not need a special designation in order to sell Freddie Mac properties. All that is needed, is for the Realtor to register with FHLMC on the HomeSteps website prior to submitting an offer for a client.

Please refer to the information above on Fannie Mae for the buying process, and to the Freddie Mac HomeSteps website for more in depth information.

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Veterans Administration – Department of Veterans Affairs – VA

VA - Veteran's Administration - Department of Veteran's Affairs, Vietnam Memorial
VA – Veteran’s Administration, Department of Veteran’s Affairs. Vietnam Memorial

The Department of Veterans Affairs, or more commonly known as the VA, guarantees a portion of a home loan to mortgage companies, banks, and other lenders for service members, and ex service members.

VA mortgages are guaranteed by the federal government, which makes it possible for lower rates to be offered by lenders that are VA approved.  These loans usually have slightly lower rates, and because veterans don’t have to pay PMI, private mortgage insurance, the monthly payment can be hundreds less than a conventional loan.

This makes it easier for lenders to provide loans, and for service members, and ex service members to qualify for loans, and to purchase homes. Unfortunately, sometimes these service members, and ex service members default on their loans.

When this happens, and the properties are foreclosed on, the VA buys back the properties, and then makes them available to the public for sale.

It is not necessary to be a veteran to purchase a VA foreclosure.  Anyone can buy a VA foreclosure, as long as they qualify for a loan through normal means.

VA homes are listed on the Multiple Listing Service, which all real estate agents and brokers have access to. You can also find VA foreclosure homes, and other government foreclosure properties listed at homesales.gov

VA foreclosures are not sold on an auction or a sealed bid basis. They are sold through realtors, in a straight negotiation basis, similar to how you would buy a privately owned home.

There are rules from the VA however, which must be adhered to, and your VA approved agent can direct you through this process.

If you don’t have or can’t find a VA approved agent, you can always utilize the listing agent on the VA foreclosed home listed for sale. Their contact information will be on the home’s detailed information.

If you are a veteran, or active duty service member, there are additional benefits that you may qualify for when buying a VA repo or VA foreclosed home.

However, no preference is given to a veteran buyer over a non veteran buyer for VA foreclosed homes for sale.  For more information ask your VA approved agent, or go to va.gov or homesales.gov

USDA – United States Department of Agriculture

USDA - United States Department of Agriculture
USDA – United States Department of Agriculture

 

USDA gives home ownership opportunities to rural U.S. citizens in the low to median income category by way of grant, loan, and guaranteed loan programs. These programs also provide funds to rural Americans to finance needed improvements in order to make their homes safe, sanitary, and decent.

When these home loans are in default, the USDA buys back the homes, and then through the use of a USDA Service Center Agent, lists the homes for sale to the public.  These homes are normally sold via auction that is handled by the USDA Service Center in the area that the home is located.

The USDA also provides a 100% loan for home buyers. This means that no down payment is required.  The home must be in a USDA approved area. Most of these areas are away from large metropolitan areas, but sometimes you can find USDA loan eligible properties within a reasonable distance to cities. To find out what areas are eligible, go to: usda.gov

For  more information on USDA, and their home programs, go to usda.gov

For a list of available USDA properties for sale in your area, go to  resales.usda.gov

 

 

 

 

 

Discover how to buy bank foreclosures!

Discover how to buy foreclosures at the Courthouse steps!

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