Closing-cost credit, agent bonus pay off
Closing-cost credit, agent bonus pay off
Back in the scary days of September 2008 when it seemed our financial world was nearing collapse, the government stepped in and took over Fannie Mae along with its counterpart Freddie Mac.
The two are now 80 percent owned by U.S. taxpayers, and the future of these two mortgage giants is still in doubt, with estimates as high as $1 trillion to fix all the problems, mostly busted loans, at these GSEs (government-sponsored enterprises).
While government stewardship is unnerving at best, Fannie Mae has nevertheless pushed forward to help recirculate thousands of its properties that have gone into foreclosure. One of its best programs has been the early-2009 launching of homepath.com, a website that helps buyers acquire a Fannie Mae foreclosed home.
"Given the fact that most people are now online looking for homes and looking up information on homes, it was appropriate to launch a website that would make it easier for perspective buyers to search for homes in a particular ZIP code, particular city, and see what's available in terms of Fannie Mae REO (real estate-owned) properties," Amy Bonitatibus, a spokesperson for Fannie Mae, told me in a recent talk.
Fannie Mae also provides financing ticklers and in September announced a seller-assistance incentive on the website along with expanding the reward for real estate agents and brokers who get involved.
The recent changes are twofold. First, qualified homebuyers who will be owner-occupants can receive up to 3.5 percent of the final sales price that can be used toward closing-cost assistance, including a home warranty if desired and available. Secondly, selling agents representing owner-occupants will receive a $1,500 bonus.
"Agents get more money," exclaimed Mark Shandrow, a principal and broker with the Shandrow Group in Long Beach, Calif. "Although this new program just got under way in September, typically Fannie Mae has been a great client for the real estate industry because it does offer very strong commissions."
Those enhanced commissions come in handy because Fannie Mae REOs generally involve homes that don't carry high price points.
Washington, D.C.-based Fannie Mae may be a hobbled mortgage giant, but it is still a giant, owning or holding guarantees on 53 percent of the nation's $10.7 trillion in residential mortgages, reported the Federal Reserve back in June.
With an increasing amount of busted mortgages to deal with, homepath.com has proved something of a boon. In the first six months of 2008, Fannie Mae "acquired" (took back) 44,701 properties and sold 23,627. A year later, in the first six months of 2009, 57,469 properties were acquired, but with homepath.com in full bloom, Fannie Mae disposed of 58,392 properties.
Then the floodgates opened. In the first six months of 2010, Fannie Mae acquired 130,757 homes and homepath.com helped it dispose of 87,612 residences.
"Aside from the massive jump in REOs in general," Bonitatibus said, "you'll see that since we launched homepath.com our dispositions have been close to our acquisitions, if not exceeded (in 2009). That's a direct result of homepath.com and the transparency and visibility of properties that are currently on the market through the site."
Special financing is available on Fannie Mae homes. Among the benefits of the financing are: flexible mortgage terms; acceptance even if credit score is low; a low down payment of at least 3 percent, which can be funded by the buyer, a grant or a loan from a nonprofit organization, government or employer; no mortgage insurance; no appraisal fees; and an availability for financing from local and national lenders.
The new incentive allows the buyers of homepath.com properties to get 3.5 percent of the final sales price that can be used toward the closing costs, which is very helpful to a lot of buyers.
Homepath.com properties generally are sold "as is," but Fannie Mae will make renovations if conditions to the property warrant.
"When a property goes into foreclosure, our brokers on the ground make estimates of a home's conditions," Bonitatibus explained. "We want to make sure we are stabilizing neighborhoods and the way we do that is to be able to list the property and sell it at a price that is competitive.
"Our agents go out and make estimates of conditions and they may say to us, in order to make this competitive to other homes in the area, you are going to want to replace the appliance. Similarly, if something like the carpet is worn, we'll replace it. We'll make those minor improvements before listing to make the property is competitive."
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