Today’s housing market is saturated with REO properties. These are real estate owned or what is also called bank owned properties.  These properties come about when a homeowner defaults on their mortgage; the property is put up for public auction, but does not sell.  After this process, ownership of the property returns to the lender who held the original mortgage on the property and is marketed as a REO property.  

In effort to help stimulate the economy, to reduce the inventory of vacant properties, and encourage buyers to take a look at REO properties, Fannie Mae has added another feature to the Home Path program.  They are offering a 3.5% discount that can be used toward the following:

•  Closing costs
•  The purchase of new Whirlpool appliance by Fannie Mae
•  At the buyer’s discretion, a mix of closing cost and appliances up to 3.5% of the cost of the property

This is in addition to the first time home buyers federal homebuyer tax credit of $8,000 that is already in place. Many first time home buyers are taking advantage of this program now and with this additional 3.5% discount, Fannie Mae is hoping to pull even more first time home buyers in to the market.  

As with all good things there are stipulations that must be met to be eligible:

•  Buyers must be owner occupants
•  Offers must be accepted on or after January 28, 2010
•  Sale of property must close before May 1, 2010
•  Investors are excluded

Lenders may have their own specific limitations and qualifications. Before you start looking at properties, you should consult with your lender and get preapproved.

With Fannie Mae financing, buyers may be eligible for the 3% down payment program under Fannie Mae and is another initiative encouraging buyers as well. Fannie Mae is also a supporter of the Neighborhood Stabilization Program and has offers in place to help make the purchase of Fannie May properties easier for buyers using NSP funds.  Some of the things they offer are:
•  Extra Time for Closing - the standard closing period is 30 days, Fannie Mae offers up to 45 days.
•  Reserved Contract Period – Buyers have the ability to renegotiate their offer after the required NSP appraisal.
•  Deposit Waivers – Fannie Mae waives the earnest money requirement when purchasing a Fannie Mae owned properties, making deposits as low as $500.

REO properties are already available at below market values and many of today’s REO properties are in excellent condition.  The benefit of purchasing REO properties include the low price tag and the ability to inspect and view the property thoroughly before making an offer.  With all these incentives available, this truly is the BEST time to buy an REO property.