How To Buy Freddie Mac-Owned Properties With Closing Costs Paid Plus a 1.5% Rebate

Freddie Mac is following in Fannie Mae's footsteps by selling their foreclosed properties directly on the open market. Freddie Mac's program is called HomeSteps and utilizes a network of real estate agents/brokers throughout the country to sell the properties and represent buyers. (Yes, the brokerage firm I'm with, Market Advantage Real Estate, and I are part of Freddie's network)

Freddie Mac's HomeSteps program is currently two huge incentives for buyers and buyer's agents/brokers:

• Freddie Mac will pay up to 3.5 percent of a buyer's closing costs*
• Freddie Mac is offering selling agents/brokers (aka Buyer's Agents/Brokers) a 1.5 percent bonus on top of the broker commission already being offered (which ranges from 2 to 3 percent of the sales price)*

*Please see Freddie Mac Terms and Conditions for more details.

How do these two incentives benefit you as a buyer?

The first one is a no-brainer. You get your closing costs paid up to 3.5 percent of the sales price. Since closing costs typically run in the 3 percent range, this incentive should cover all of your closing costs leaving only the down payment amount due at settlement.

As for the second one, let me explain…

If you hire me as your Buyer's Agent, I will rebate any amount of commission/bonus paid to my broker above 3 percent of the sales price back to you on any and all Freddie Mac properties you purchase that offer the rebate.

For example…If the commission being offered is 2.5 percent and the bonus is 1.5 percent, you will receive 1 percent back as a rebate. If the commission being offered is 3 percent and the bonus is 1.5 percent, you will received 1.5 percent back as a rebate.

Why "give away" my commission like that? Because I believe that making 3 percent of the sales price as a commission is fair and anything above and beyond that seems like a second-helping when you're already full. 

How do you search for Freddie Mac-owned properties? The brokerage firm I'm with, Market Advantage Real Estate, has made it easy for you. They've added a search feature that allows you to search for Freddie Mac-owned homes only. This will help filter out the "noise" and allow you to only search those properties owned by Freddie Mac. (The search feature may not be pretty, but we were focused on getting a functional resource out to consumers ASAP)

If you'd like more information about any of the Freddie Mac-owned properties you come across in your search or have questions about how the process works, please email or call me - danilo.bogdanovic@gmail.com - 703.582.5900.

How To Buy Fannie Mae-Owned Properties With Zero Money Down, No Mortgage Insurance

   

A little-known fact is that you can buy Fannie Mae-owned foreclosed properties with as little as zero money down with no Mortgage Insurance. Fannie Mae is selling their properties through a program called "HomePath" and they're selling them for 50 to 75 percent of what they were worth just a few years ago.

Fannie Mae also offers a program called "ExpressPath" which is a financing option provided by Fannie through a Fannie-approved lender. ExpressPath financing can provide qualified borrowers up to 100% financing on select Fannie Mae properties. 

How do you search for Fannie-owned properties? The brokerage firm I'm a part of, Market Advantage Real Estate, has made it easy for you. They've added a search feature that allows you to search for Fannie Mae-owned homes only. This will help filter out the "noise" and allow you to only search those properties owned by Fannie Mae. (The search feature may not be pretty, but we were focused on getting a functional resource out to consumers ASAP)

How do you find out more about ExpressPath financing? Just click here.

If you have questions regarding the process, don't hesitate to contact me directly or check out the FAQ section on Fannie's web site. Here's an excerpt:

How is buying a home owned or managed by Fannie Mae different from other home purchases?

Usually, when you buy a home, you deal with a seller who lives in the home. However, the homes sold by Fannie Mae are unoccupied. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.

Can I buy a house directly from Fannie Mae without going through a real estate sales professional?

No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.

If you'd like more information about any of the Fannie Mae-owned properties you come across in your search or have questions about how the process works, please email or call me - danilo.bogdanovic@gmail.com - 703.582.5900.

Related Posts

How To Buy Freddie Mac-Owned Properties With Closing Costs Paid Plus a 1.5% Rebate

U.S. Foreclosure Statistics Show Mixed Signals

The most recent U.S. foreclosure statistics just released by RealtyTrac and CNN show mixed signals. September 2008 saw a 12 percent decline in foreclosure filings over August 2008, which is good. But it also was a 21 percent increase over September 2007, which is not so good.

Though the increase over last year is an important statistic to consider, the decline over last month is even more important because it's more relevant to how the current market is doing and where it's headed. If we see a continued decline in foreclosure filings as 2008 comes to an end, this will bode well for market in 2009. If not, the 2009 U.S. real estate market may not get off to such a great start.

What's interesting is that there's a quote in the CNN article that says,

The bad news: The housing market will be flooded with bank-owned homes. "We are estimating that by the end of this year, between one quarter and one third of all homes for sale will be bank owned properties," he said.

That could push down prices even more, perpetuating a vicious cycle, but it might also start to attract bargain hunters who may absorb some of the massive housing inventory.

Well, Loudoun County bank-owned and short-sale properties have made up one quarter to almost half of all homes for sale for almost 2 years now. And the bargain hunters and investors started coming out in packs to buy up that inventory well over a year ago and they're continuing to do so.

This just goes to show that Loudoun County and the DC metro area are ahead of the rest of the U.S. (as we usually are). Our boom market started before most of the country. The peak of our boom market (Summer of 2005) was ahead of most of the country. And the bottom of our bad market usually comes before the rest of the country's does. If they're calling for that "bad news" to happen just prior to the bottom for the U.S. housing market….well, it's already been happening here in Loudoun.

IndyMac, Other Banks Say, “Oh By The Way… We Won’t Pay For Points Afterall”

For those of you who are planning on writing an offer on a bank-owned/foreclosure property, know this…certain banks such as IndyMac will not pay for any of your discount or "buy-down" points. IndyMac and certain other banks will send you an "addendum" after the contract and bank addendums have been signed (aka ratified) with several provisions in it, one of them being:

"Seller's closing costs not to pay for discount points and/or buy down points."

What does this mean to you as a buyer? It means that you'd better make sure you plan on paying any discount or "buy down" points out of your own pocket if you're trying to buy an IndyMac owned foreclosure property.

What if the bank agreed in writing to pay ______ amount in seller closing cost assistance and part of your closing costs is a buy-down point(s)? Even if these points are part of your closing costs which the bank agreed to pay for as part of the contract and bank addendum, the bank will refuse to pay for them.

Is it starting to smell fishy in here? Keep on reading, the smell gets stronger.

The person authorized to initial and sign the contract and bank addendums on behalf of the bank tends to forget to initial the contract in 2 or 3 places almost every time.

This brings up several questions:

1. If the offer was already ratified, is the "addendum" really just an "ammendment"?
2. If the offer was already ratified, does the buyer have to sign and agree to the "addendum"?
3. If the buyer refuses to sign the "addendum", does the bank have the right to not move forward with selling you the property?
4. Is the person authorized to initial and sign for the bank accidentally or purposefully leaving a few initials missing so one could argue that the contract wasn't technically "ratified"?
5. Is the bank using the missing initials and "not technically ratified" as a way to coerce a buyer into signing the "will not pay for discount and/or buy down points addendum" and/or leaving the bank a way out of the contract?
6. And lastly, is what they're doing right or wrong? If wrong, what can be done to stop it from continuing to happen.

I am not a lawyer and therefore will not get into legal-ease. This is a matter that should be referred to a lawyer for clarification and guidance.

What I will say is that I personally believe and it's my personal opinion that it doesn't seem right for a seller to accept and agree in writing to an offer that includes seller closing cost assistance and then come back later and say, "but I won't pay any discount or buy down points as part of the closing cost assistance I originally agreed to in writing".

Wait, there's more. Hold your nose real tight and breathe through your mouth cause the smell's gonna get worse…

Some of these banks don't bother to tell the listing agents that are listing their properties that this policy or the "extra addendum" even exist.

Despite this policy by these certain banks, is there a way to still get up to 1 point paid for by the bank? Yes, there is. Knowing this loophole is key to negotiating with banks.

Moral of the story? Be careful out there and make sure your buyer's agent knows what they're doing when it comes to foreclosures/bank-owned properties and dealing with the various banks out there.

Read This Before Writing an Offer on a Bank-Owned Property

If you're considering writing an offer on a foreclosure/bank-owned property, you need to read the post entitled "20 Things You Should Know When Writing An Offer on a R.E.O. Property" over at Agent Genius. Though it's for agents, most of the items pertain to buyers.

Here's an excerpt:

#1 Verbal offers are rarely accepted, considered, or responded to.

#2. Seller is an institution or government agency and does not respond to offers on weekends or holidays. Offers presented during these times will be presented the following business day!

#3. Be aware, the possibility of multiple offers exists, all offers will be presented to seller. Please read items 4-8 carefully.

#4. Seller is looking for HIGHEST AND BEST OFFER, this means that the highest offer may not be accepted. The institution definitely weighs all of the risks associated with offers. Contingencies and sales terms are considered to determine with whom they will enter into contract.

#5. Response times of 5 to 7 business days or longer are not unusual. Your offer will sometimes require the signatures of multiple parties. Be advised that all efforts are being made to give the buyer a timely response. The listing agent has no control over this time frame! The listing agent has the same desire as you, to see a successful closing!

#6. Due to the nature of R.E.O’s, once there is an acceptance of your offer, the usual turn around time for an executed (fully signed) contract is 7 to 10 business days.

#7. Because of items 2 - 6, once an offer has been sent to the seller for FINAL (fully signed) approval, all offers after that are considered back up offers.

#8. Seller may respond with a “reject offer” with no counter.

The remaining 12 items are also important so make sure you check out the full post. If you have any questions on any of the items or need clarification, don't hesitate to contact me - danilo.bogdanovic@gmail.com or 703.582.6900.

Should You Hire a Company or Negotiate Directly With the Bank?

Many people have been asking me about companies who offer to re-negotiate the terms and rate of their loan in order to avoid foreclosure. They want to know whether hiring su a company is worth it. Many also ask if it's possible to contact their bank directly in order to re-negotiate their loan terms.

From what I gather and from what people I've talked to are saying, it's better to contact your bank directly first. There are three main reasons for doing so:

1. The bank prefers hearing from the borrower directly.
2. The time and energy spent using a company is almost the same as what you'll spend doing it yourself.
3. You will save thousands of dollars by doing it on your own.

Many of these companies charge upfront fees of a several hundred to a few thousand dollars along with back-end fees in the thousands. This is money you're giving someone in order to do the same thing you could be doing yourself.

In addition, these companies don't (and can't) guarantee that they'll re-negotiate your loan terms. If you do it yourself and they deny you, you'll be out time and energy. If you hire a company to do it for you, you'll be out time, energy…AND money.

Here is what someone I emailed back and forth with yesterday wrote:

"I talked to my bank and they pretty much told me I could do this restructure directly with them without the high fee.  As soon as I told the LEI agent that I had spoke to my bank he immediately backed off. 

I read about some of these financial firms offering this service telling their customers not to talk to their bank and wanting money upfront.  It's not illegal but it definitely adding more debt for the homeowners when their service is unecessary. 

My bank says they don't currently have any programs for people who's mortgages are kept current.  They only have programs for people who are deliquent or about to or have their mortgage balloon.  They did say however that they were in the process of creating a new program for those who do keep their loans current and to call them at the end of the month.  I still have 2 years so I'm going to keep researching my best options. 

Thanks for your help!"
 
-Dan 

Funny how these companies back off once you tell them how you're doing in on your own. It seems that most of these companies prey on consumers that either don't know they can do it on their own or are scared to do so.

The point is…contact the bank directly yourself before you pay anyone else a penny to do it for you. And don't be scared to do so - you can save thousands by getting past your fears. 

 

Loudoun Foreclosure Property Auctions Not a Hit With Buyers

Though Loudoun foreclosure/bank-owned properties are selling like hot cakes on the open market, foreclosure auctions are like ghost-towns. Few attend foreclosure auctions and the ones that do attend rarely make a bid.

Why? For the same reason regular properties that are up for sale just sit on the market…they're overpriced. And even if the price seems right, people are skeptical about bidding because they can't always inspect the property in person prior to bidding.

There's a great article in the Washington Business Journal that helps explain the situation in more detail. Here's an excerpt:

Many investors, who make up the bulk of active bidders at auctions, say the banks are asking too much for the homes. So far this year, 748,381 homes—or 46% of the foreclosures—have gone into the possession of the banks as real-estate owned, or REOs, because no bidders were interested in them at auction.

Individual buyers looking for deals at auctions will likely not find one, says Foreclosures.com President Alexis McGee. Making it harder for individuals: it is generally not possible to examine the properties in person before buying them and buyers must have money with them to make a down payment on the home.

Back in April, ABC7 News (WJLA) interviewed me for a story on this very subject. Funny thing is, the same is true now as it was then.

The only good thing is that banks are starting to "get it" when it comes to how they price their bank-owned properties on the open market, which is evident by the increasingly high number of bank-owned property sales in Loudoun County and the DC metro area in general.

Trying To Avoid Going Into Foreclosure?

If you're trying to avoid going into foreclosure, you should check out some of the possible options available to you. One is Hope for Homeowners and the other is Hope Now.

Hope for Homeowners offers assistance to those who bought their home prior to 2008 and have a monthly payment that is over 31% of their income. It allows for banks to write the mortgage down to 90% of the home's current value. To learn more, check out the Hope for Homeowners FAQ page on HUD's web site and the Hope for Homeowners Fact Sheet.

Hope Now is a program that is offered by select lenders and mortgages providers that helps homeowners renegotiate their mortgages, and or defer or reschedule monthly loan payments. For more information, check Hope Now's web site. To contact Hope Now, call (888) 995-HOPE (4673).

Another option is to try and negotiate a short-sale. Though they say that short-sales are not as bad on your credit as a foreclosure, there are a lot of strings attached to short-sales and the chance of them being approved is pretty slim.

In my opinion, trying one of the first two options first as well as speaking with a tax professional and a financial planner for guidance would be a good place to start.

Related Articles

"Guide To Avoiding Foreclosure" - HUD

"Home Seller Needs Serious Help To Avoid Foreclosure - Short-Sale or Deed in Lieu" - Trulia Voices

"How much foreclosure relief will homeowners get from the bailout plan?" - Peter Y. Hong, LA Times

Loudoun Foreclosure Assistance Barely Makes a Dent

In July, Congress approved $4 billion to be distributed to the nation's hardest-hit communities when it comes to foreclosures. Of that $4 billion, $46 million is being sent to Virginia. Of that $46 million,  $38.7 million will be channeled through housing officials in Richmond with $4.1 million going to Prince William County and $2.8 million going to Fairfax County. 

It seems that Loudoun County has not yet applied for any of that money so the amount being sent Loudoun's way has not been set. But people are estimating that Loudoun County should be receiving an amount somewhere in between that of Prince William and Fairfax.

The extra money is great in theory. But if you consider the average price of a foreclosure property in Loudoun County and the number of foreclosures in the county, three or four million dollars won't get Loudoun very far. It'll barely make a dent.

With Northern VA being hit so hard and contibuting the overwhelming majority of tax revenue for Virginia, I'm wondering why more of that $46 million isn't coming our way.

Housing officials in Northern Virginia and Richmond met this week to talk more about how to allocate $46 million of that emergency federal aid. Hopefully, the amounts will go up for this area and Loudoun will apply for some of that aid in the process.

Foreclosures, Short-Sales Make Up 39% of Loudoun Real Estate Inventory

Foreclosures and short-sale properties currently make up 39 percent of the total Loudoun County real estate inventory. As of this afternoon, 697 of the 1801 total homes for sale in Loudoun County are foreclosures or short-sales. We've been seeing foreclosures and short-sales represent an average of 25 percent of the total inventory in Loudoun throughout most of 2008 so this is quite a jump. 

After looking at the numbers and types of properties for sale, it seems that there are less "traditional" listings (non-foreclosures/short-sales) on the market than usual, but banks and distressed home owners are still trying to unload their properties at the same rate. This may be what is driving the percentage number up.

Overall, Loudoun real estate inventory is down so this statistic isn't necessarily cause to be alarmed. But, if you're a buyer, know that banks and agents listing these properties are well aware of the lower inventory levels which bodes well for them, not you, when it comes to negotiating an offer.

Next Page »