Fannie & Freddie's Nationwide Summer Clearance

By Christina Suter on Jul 11, 2011 at 10:29 AM in Real Estate Issues

I wanted to bring your attention to a summer sales promotion launched in mid-June by government lenders Fannie Mae and Freddie Mac, which provides financial incentives for certain buyers and agents.

Fannie & Freddie Summer Incentive

While their stated objective is "neighborhood stabilization," I believe it's no coincidence that between them, Fannie and Freddie have amassed an inventory of more than 200,000 REO properties that they would like to unload. After their initial hesitation, they ended up jumping full-bore on the alt-prime and sub-prime bandwagon. Together, the two agencies represent more than 50% of the lending market and thus are the primary, core institutions that set the industry standards. 

Here's a brief summary of the promotion:

  • Both agencies will pay up to 3.5% of the final sales price toward the closing costs of qualified buyers of REO (foreclosure) properties. 
  • Loans must close by Sept. 30 for Freddie, Oct. 31 for Fannie.
  • Participating agents will also receive a $1200 bonus for encouraging buyers to participate in the program.
  • The property is required to be your primary residence, not an investment.
  • Fannie offers special mortgage financing and might accept a down payment as low as 3%.
  • Approximately 220,000 properties are available, as listed on two (Fannie) and (Freddie)

As this Los Angeles Times story points out, while these homes range from condos to expensive single-family houses, they are all foreclosures and thus may not be in the best of condition. So don't neglect to perform your due diligence on the property you are interested in, and be sure to compare home values and comps to make sure you're getting a fair price.

If you are interested in taking advantage of these incentives, talk to your real estate agent.