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Fannie Mae Double Standard - Calling my owner occupant buyer an investor!

Real Estate Agent with Progressive Realty (Boise Idaho) www.Progressive-Realty.info DB-17066

December 22, 2010 03:55 AM

I thought I would share a situation regarding a major double standard I am facing with Fannie Mae regarding a potential home purchase.

I have a client that is trying to buy a larger home. Instead of selling his home at what we believe is the bottom of the market, he will keep it as a rental since it will cash flow. I understand that with concerns over strategic defaults, that the lender can not use income (projected) on his current home since he does not have a one year history of that income and that they will have to still count his payments, etc., as a debt. Even with those limitations, my client qualifies!

We made an offer on a Fannie Mae REO and was SHOCKED that it got rejected since they are calling my proposed Owner Occupant and investor since he will be owning a second home! The buyer is going through the HomePath Mortgage program. HomePath is a Fannie Mae product being used to by a Fannie Mae property and yet they are not treating this client equally!

Parts of the problem include:

1) The listing has a provision stating that the home will not be sold to investors for the first 15 days it is on the market. I believe today is day 76 but they are claiming that since the property fell and came back on the market (even though it was continuously in the MLS showing either contingent or pending for a while) that the clock starts over so they can't even address our offer for another 10 days because my buyer is "an investor".

2) Because they have labeled him as an "investor" they are also not going to apply the 3.5% of the buyer's closing costs!

3) The incentives on the 3.5% closing costs and $1,500 selling agent incentive expire if the home is not closed prior to 12/31/2010 and they won't even let us submit our offer till after the 1st due to them determining it takes 15 days after the home is back on the market!

I have requested to the listing agent that they send me the copies of the Fannie Mae guidelines that warrant their response. I am doubtful they will comply. I have checked with my lender and several other agents and they all agree it is CRAP.

I am open to suggestions and curious if any of you have run into similar Catch 22's.

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Chris "The Loan Ranger" McBrearty, NMLS 274079

Fairway Independent Mortgage, DBO/CRMLA #41DBO-78367, NMLS #2289 - Rancho Bernardo, CA

FHA, VA, USDA, Loan Officer and Educator

Frustrating I know, he who has the gold makes the rules.

Dec 22, 2010 03:56 AM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

I hope to see the document that explains where you draw the line of being an investor!

Stocks?
Bonds?
US Saving Bonds?
Savings account?

Time to get a filter, I think we threw the baby out with the bath water somewhere along the way!

Dec 22, 2010 04:54 AM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

I called Fannie Mae and the person I talked to said he didn't think it made sense either so he gave me the asset manager's number. I called them and dropped into Voice Mail.

Dec 22, 2010 06:09 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

I suspect that I'd be asking for the person who made that decision's SUPERVISOR. It needs to get out of the hands of a clearkel into the hands of someone who (supervises) the clerkel and knows the regulations that they are enforcing.

KICK IT UPSTAIRS.

Dec 22, 2010 10:00 AM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

@Lenn, you are right and "kicking it" I am! I have contacted several departments at Fannie Mae directly. The first just put me back to the asset manager again. I am still waiting to hear from the asset manager and it has been over 24 hours. I am surprised that I have received some feedback from Fannie Mae already but no resolution. I have requested specific written guidelines that were used to make this decision and I bet they haven't responded because they couldn't find them. I talked to another one of the Fannie Mae listing agents here in my area and she said she has never been able to get the documentation either, but she did say that they have do hold this position.

I sure welcome feedback from people that have gone through this situation before or that can point me to the source documents!

Dec 22, 2010 10:43 AM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

Fannie Mae has been very helpful on this so far. I just completed a phone call with a Level 2 employee who was able to pull the file up online and concur that I am probably correct. They did concur we were not subject to the First Look period due to timing on this particular file, and that we probably should not be subject to being an Investor.

It sounds like I might have to send Fannie Mae a thank you card. Time will tell if I need to use a "forever stamp" but so far they have been EXTREMELY responsive and actually answer my calls!

Dec 23, 2010 05:34 AM

Anonymous

I put an offer on a Fannie Mae property and they said that I was an investor and not an owner occupant. I do not own a home, and planned on living in this house. The listing agent asked for proof (rent reciepts and cancelled checks) that I rent, which I gladly gave them. The agent told me that Fannie Mae made that determination based on the amount of work the home needed. Now the home passed the first look period and is being sold to an investor. What good is this frist look period if you cant even get your offer through?

Apr 29, 2011 07:41 AM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

I think buyers need to start sueing the processors for making judgement calls without evidence! It typically isn't Fannie Mae, it is their regional outsourced rep.

May 09, 2011 06:01 AM

Anonymous

Frank B

Double standard indeed! Fannie Mae will sell a condo to a buyer in a non-conforming condo community thru the HomePath. The community is not HUD approved so if a buyer wanted to use an FHA mortgage and buy a condo from a regular home seller, Fannie wouldn't allow it. Yet, through their HomePath loan program, they will make an exception??? DOUBLE STANDARD!

Oct 06, 2011 06:47 PM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

@Frank, Keep in mind that HUD and Fannie are two different organizations. It does make sense for Fannie to allow it since they already insured it once. Two standards yes, double standard, possibly not.

Oct 08, 2011 05:38 PM

Anonymous

J M

Same Thing is happen to us as what is happend to frank B. we submitted an offer on a first look property as OO. we rent and have never owned a house. The offer we submitted was full asking price. We were rejected and told to resubmit as investors. But they house is still under First Look so ther eis nothing we can do. Our agent called and talked to the asset manager plead our case. She said she would forward it to her supervisor and if he and the director signed off on it they would accept. My family is full of carpenters and they went to the showing with me to get an estimate of what it would take to fix the hosue to a "livable" condition. I dont think that it is fair that the asset manager can tell me that I am not capable of fixing a house in 2 months. Its in a rural community that doesnt require permits. So in all likelyhood we will lose the house to an investor who is going to fix it and sell it 6 months down the road.

Feb 08, 2012 06:47 AM

#11

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

JM, you might consider getting an FHA 203k loan which will let you close on the house as is and then even lend you money for the repairs. If the property is a HomePath listing, check into a HomePath Renovation loan!

Best of luck and thanks for stopping by my blog and commenting.

Jim

Feb 08, 2012 09:58 AM

Anonymous

Yeha just got word offer was rejected again we have cash for the home but. i guess we can hope that no one else puts a bid in on it.

Feb 08, 2012 12:32 PM

#13

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

Things seem VERY wrong with what you are describing. Your agent should check with your broker and maybe a good real estate attorney to help you get this completed and to put some pressure on the seller into realizing you are more than serious about acquiring this home as advertised.

Feb 09, 2012 04:29 AM

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