Rent TO OWN sales prohibited on Fannie Mae properties

By
Real Estate Broker/Owner with Riverbend Realty, Cape Girardeau, MO 2004008944

Fannie Mae is doing its part to cut down on RENT TO OWN schemes. Any investor purchaser will be required to agree to the following:

 

Effective Tuesday, May 23, all new offer negotiations must include the verbiage below in Section 38 of the Real Estate Purchase Addendum if the buyer type is a non-owner occupant. Any negotiations that began prior to May 23 are exempt.


"Purchaser further agrees that it will not enter into any contract for deed or lease with option to purchase agreements regarding the Property, unless Purchaser is a non-profit organization or has obtained Fannie Mae’s prior written consent.  Purchaser acknowledges that, in addition to any other remedy available to Fannie Mae, any violation of this agreement may result in Fannie Mae refusing to sell additional REO properties to Purchaser and/or its affiliates."

I am sorry to see Fannie Mae having to make this move, because I know that there are a few good eggs in the world who do good things with contracts for deed. I also know, however, that most "rent to own" arrangements border on fraud (if not being outright fraud).

My late father-in-law sold a number of houses privately (before I went into real estate) to people he knew using the contract for deed method, and most of them ultimately closed. He encouraged and helped his buyers, most of whom were farm laborers, to obtain financing from local lenders after they had enough equity in the homes. Of course, the difference was that he never had any intent to defraud his buyers. On the contrary, he was making an investment in--and taking a risk for--people he knew.

Posted by

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If you are looking for a foreclosure in Cape Girardeau, Perry, N. Scott, or Bollinger counties, I am the region's most experienced REO agent. As the area's ONLY Fannie Mae direct listing agent, I list more foreclosure properties than any other agent in this MLS. I am among the few local agents approved to both list and sell HUD properties. Give me a call if you are looking for help with the purchase of a foreclosure property.

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http://www.homepath.com/  for Fannie Mae properties

http://www.homesteps.com/  for Freddie Mac properties

http://www.hudhomestore.com/ for HUD properties (foreclosures that were FHA financed)

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Rainmaker
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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Liz, the concept sounds like it would work, but have seen none go to closing in all my years.  

May 23, 2017 08:00 AM #1
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Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

There is always something we have the be alerted to.  Thanks for sharing.

May 23, 2017 08:38 AM #2
Rainmaker
3,977,511
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

REnt to own is about as cloe to a scam as anything I have seen

May 23, 2017 09:18 AM #3
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

I completely agree with this. I never have done this to a potential buyer and never will.

May 23, 2017 03:00 PM #4
Rainmaker
303,859
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

I cringe for the vulnerable, Joe Pryor , every time I see one of those signs.

May 23, 2017 03:04 PM #5
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Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

Liz I think this is a good idea to protect the public.  While there are some good folks that are honest with their contract for deed file....there are many that are really just plain fraud.  I do not deal with this type of contract.  Although I heard recently at a local event they're coming back into play....not on my watch.

May 23, 2017 04:46 PM #6
Rainmaker
2,473,716
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Interestingly enough, during the real estate downturn that resulted from the 2008 meltdown, I had a family member enter into a rent to own agreement with a seller.  Alas, 3 years later, when the contract was to close, the seller decided the property value had gone up significantly, and didn't want to finalize the sale.  It ended up in court, and the buyer (my relative) prevailed.

May 24, 2017 07:34 AM #7
Rainmaker
303,859
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Anna Banana Kruchten, CRS ~ I agree that it is a good move by Fannie Mae. I sure hope that the Rent to Own scammers do not get much market share.

May 24, 2017 08:44 AM #8
Rainmaker
303,859
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Myrl Jeffcoat ~ That was an unusual twist. I hope your relative also made the seller pay legal and court costs!

May 24, 2017 08:45 AM #9
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Liz Lockhart

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