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Fannie Mae Changes Timeline on REO's.

By
Real Estate Agent with Keller Williams

Fannie Mae has just recently reduced the original timeline for lenders and servicers following foreclosure notification from 15 days to 0 days. The 15 day rule was so the "best offer" could be procured but with the excess inventory of REO' s on it's books-Fannie Mae is getting aggressive. Although this may open up some opportunities for home buyers, you can be sure investors will be all over this as well.

Washington Report: REO Discontent by Kenneth R. Harney 

Mortgage giant Fannie Mae is unhappy about the mounting thousands of REO houses it's stuck with, but now it's moving to sell off that inventory faster than it has in the past, potentially opening up some interesting opportunities for home buyers and their agents.

In a new policy announcement, Fannie says it will now accept purchase offers for its REO immediately after listing, without notifying lenders or mortgage servicers whose loan files are under review.

Under its previous policy, Fannie gave lenders and servicers fifteen days to find a better purchase offer for new REO they sent to the company following foreclosure.

That policy affected all repossessions where Fannie demanded the loan file on the house - potentially exposing errors in underwriting or servicing, and requiring reimbursement for losses by the lender.

But that policy also had a negative impact on Fannie's ability to move its REO out the door quickly. The fifteen day time-out slowed down the works - and sometimes kept properties out of reach of ready and willing buyers.

Partly as a result, Fannie's portfolio of unsold acquired real estate has been ballooning lately. According to its most recent securities filing, the company, now under federal control, took in more than 98,000 properties following foreclosures during the first three quarters of 2009.

During the same time, it sold about 90,000 houses.

But because of a widening imbalance of REO in and out the door dating to prior years, Fannie was sitting with 72,000 unsold houses - about a 7 percent jump from the same period the year before.

Fannie's response to this REO bloat? Sell off the houses faster by accepting purchase offers through its network of real estate listing agents earlier.

In the company's memo to lenders and servicers, it basically said this: We're now going to market houses as soon as they come in the door and we've established a current value.

No more fifteen day time out period for lenders whose REO we've selected for loan file reviews.

As soon as Fannie lists an REO property, it will be fair game for home buyers. And if Fannie ultimately sells for a loss - and the loan file review turns up bad underwriting or other problems - Fannie plans to stick the lender with the loss.

Bottom line for home buyers and agents under the policy change: Look for earlier access to REO properties, and earlier decisions on purchase offers.

Fannie is determined to slim down its REO portfolio in 2010, and that just might provide opportunities for heads-up buyers and agents looking for deals.

Published: January 11, 2010

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Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I've been reading this...I thought that foreclosures were not subject to the 90-day rule. Only homes sold at auction to investors and other flippers. I'm still trying to figure this all out. However....it's great news. I have always wondered about the purpose behind that rule.

Jan 16, 2010 04:23 AM
Jean Hanley
Coldwell Banker Kivett Teeters - Hemet, CA
Specializing in Folks Who Want To Buy/Sell Homes

Well it's about time they started moving these homes off the lot.  I never understood why they chose to sit on foreclosures for days, even weeks before doing anything.  Seems like it would be wiser to get em off the books.

Jan 16, 2010 04:26 AM
Randy Schulenburg
Schulenburg Realty, Inc. - Pingree Grove, IL
Schulenburg Realty, Inc.

Thanks for the post.

Remember when builders wouldn't sell to an investor?  Now they'll sell to anyone.  Sounds like Fannie Mae is now realizing that in order to move properties they need to make them available to everyone as soon as they possibly can.

Jan 16, 2010 05:16 AM
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC

This will make allot of the REO agents that hide the listings for there investors very very happy. And some agent very mad.

Jan 16, 2010 05:22 AM