When homeowners default on their Fannie Mae loans, Fannie Mae takes possession of the homes. Fannie Mae doesn’t want to keep these homes on their books, though. The idea is to sell the homes and make back as much of the money as they can on it.
The program to sell these homes is the Fannie Mae HomePath program. Fannie Mae uses this program to sell the homes in their inventory. Typically, the homes are for those that will occupy the property only, but investors eventually become eligible to purchase the home.
Keep reading to learn how it works.
The ‘First Look’
Fannie Mae offers a ‘First Look’ period, which is the first 20 days the home is listed. During that time, only those that will live in the property can bid on the home. Fannie Mae offers this period in an effort to build up an area with a large number of foreclosures. There is a lower risk of the home sitting vacant when owner-occupied buyers purchase the property versus those that will rent the home to others.
When Can Investors Bid on the Home?
If the home doesn’t sell within the ‘First Look’ period, which is usually 20 days, but it can vary, then investors may bid on the home. Before that time, Fannie Mae will not accept bids from investors. You can tell how much time is left before you can place an investor’s bid on the home on the countdown clock on the listing.
Understanding Your Bid
Bidding on a HomePath property works differently than bidding on a standard home purchase. First, you must use a licensed real estate agent. Only the real estate agent can make the bid for you. Next, you have to understand the parameters of the bid:
- Fannie Mae sells the home ‘as is’ so you should know what condition it’s in and make sure it’s something you can handle
- You may want to hire an inspector before you place a bid so that you know if there’s anything major wrong with the home
- You cannot include contingencies in your contract
The rest of the purchase process is similar to what you would experience with any other loan program. You need to be able to secure your financing by the contracted date so that you can close on time. The biggest issue is that you won’t get any seller concessions or have any contingencies in the contract that allow you to back out of it.
In the end, investors may be eligible to purchase a Fannie Mae HomePath property if no one purchases it for owner occupancy. It helps to have a real estate agent that is well-versed in the program to understand your options.Click to See the Latest Mortgage Rates»