Fannie Mae REO Shocker

[Ryan Webber]

I went to put an offer on a Fannie Mae REO, and I had to sign a disclosure that I understand that there will be deed restriction that I cannot sell the property for 90 days for more than 120% of the purchase price! :shock: I also cannot get a loan for over a certain amount of the purchase price either (the exact restriction for that part wasn't filled in yet). This restriction will be written into the actual deed that I receive and will run with the property for the restricted time period.

I was shocked. I dropped my offer from 26K to 18K. :D

The property needs quite a bit of work, and I think its crazy that a quasi-government entity is going to start dictating what properties can be resold for.

[J Scott]

Originally posted by George Gogas:

I would greatly appreciate if you can explain to me what do you have to do to get the reduction? Also what are the reasons that would approve the request for the reduction?

First, the restriction is on the transfer of the deed, so it doesn't matter what type of financing your end-buyer is using (cash, FHA, convention, etc), the restriction is still there for 90 days.

Agreed that this doesn't make much sense (just like FHA), but if you sign the contract and agree to it, that's what's going to happen.

As for how to get this restriction lifted, after you have a ratified contract with the seller, have your agent submit an addendum that stipulates that the title seasoning is reduced or eliminated. If the FNMA asset manager signs it, you're good to go. If they refuse to sign it, the restriction will stay in place.

Given that, it's best to make this request if you have other contingencies with which you can back out of the deal, as they would likely rather you proceed with the deal, even if it means lifting this restriction.