Dealing with Fannie Mae?

Question

Has anyone had any success buying bulk packages directly from Fannie Mae?

I am interested to hear if anyone has had any positive or negative experiences with Fannie and also how they got in touch to get a bulk package.

From what I hear it is very difficult to get in with Fannie but that makes it all the more intriguing.

Chris Martin · Answer

Yes, I know this is old. @J Scott, I would not accept your apology because you were correct. Technically FNMA is currently a financially solvent, profitable, and independent corporation. Treasury has warrants to purchase, effectively, 79.9% of FNMA. Per GAAP, Department of the Treasury still has a 79.9% 'ownership interest'. In the notes to their latest annual SEC filing, they say:

"In September 2008, we issued to Treasury a warrant to purchase, for one one-thousandth of a cent ($0.00001) per share, shares of our common stock equal to 79.9% of the total number of shares of our common stock outstanding on a fully diluted basis at the time the warrant is exercised. The warrant may be exercised in whole or in part at any time until September 7, 2028. As of February 21, 2014, Treasury has not exercised the warrant. The information above assumes Treasury beneficially owns no other shares of our common stock."

Well. Here we are. 2014. Taxpayer Bailout: $116.1B out. Since then: $126.8B back to Taxpayers. And the US Taxpayers still own... the warrants. 80% of a $22.2B company. A profitable company to boot, with dividends continuing....

I'd say the bailout worked for US taxpayers. If a BP member put this deal together, I suspect they would get 50+ votes in the "Real Estate Success Stories" Forum.

http://www.sec.gov/Archives/edgar/data/310522/000031052214000067/fanniemae201310k.htm

http://www.sec.gov/Archives/edgar/data/310522/000031052214000158/fanniemaeq20630201410q.htm

http://projects.propublica.org/bailout/

J Scott · Answer

Yes, sorry...I was very inaccurate in what I said...

FNMA was a publicly traded independent corporation UNTIL it was taken over again by the government back in 2008 during the bailouts...

Thank you for the correction...

Luc M. · Answer

J. Scott - none WERE owned by the goverment.  FNMA is now 79.36% owned by the Government.  Me and you still supporting a bunch of bad loans!

J Scott · Answer

Both companies were established by the U.S. government -- FNMA in the 1930s to provide mortgage services and SLMA in the 1970s to provide education loans.

Neither are currently owned by the government (they were spun off as independent corporations), and the companies have no relationship to one another.

Ike Gardner · Answer

Is Fannie Mae owned or in conjunction with Sallie Mae?

Steve L. · Answer

I know they have sold a lot of properties.  But they also have a pool for just Detroit under 2,000.

Steve L. · Answer

I'm a member of their program.  They have some funky criteria.  The BPO has to be under 50k, they have had to be on the market for 90+ days.  You can not sell any of the properties to non owner occupants (only 10-20% after 30 days) and have to wait at least a year for the rest.

The approval process involved a 15 page application.  Got to proof up, and pass a phone interview.

I've seen 5 or so pools, all the properties are pretty bad.  But I guess that is expected for under 50k in California.

They do have a lot of pools. I just know next to nothing about out of state properties.

Hope this info helps.

Account Closed · Answer

Chris major flaw in your theory.....what if a property in wake was part of a bulk sale with 200+ properties in other counties.  Yours would look like a normal sale.   The data you were working with wasn't large enough.    To be sure, check every sale by fannie within your state, and lets say another heavy REO area...like AZ CA or FL, then cross reference to your list of buyers from fannie.

Anyways, our office handles fannie mae listings and we lost a few to a bulk sale (typically scratch dent properties).    They sold for i think half the listing price (that we couldn't get).    In my particular situation the 2 assets we lost ended up being resold about a year later by a fund that ended up selling for a 500 dollar loss...they had to pay closing costs on both ends i believe and took a small hit on top of it.    I'm guessing other areas were profitable, but mine wasn't.

I have the contact info to purchase a bulk deal from fannie.   It isn't really all that attractive though if you ask me.

I think its like 250 properties in a bundle, average price point is 20k.  Spread out over maybe 10 states.       Pulling this data from about a year ago and my memory isn't known for being that accurate.

Chris Martin · Answer

Having said all that... I did find from https://www.efanniemae.com/sf/ns/hpreo/pdf/poolsalesfaqs.pdf this:

Q22. How does an investor get approved to participate in a Pool Sale? 
The broker should direct interested investors to send an email to alternative_sales@fanniemae.com. The response will include a worksheet with a series of questions that that will help Fannie Mae better understand their investment focus.

I sent them an email... although I am not holding my breath.

Chris Martin · Answer

Intriguing, yes.

I had a local contractor offer a JV on Fannie Mae bulk rehabs. He was asking for $150K for buying really cheap property and he offered a "30-40% RETURN" secured by the property. I asked a handful of questions... all he couldn't answer. Red Falgs. He claimed (he was apparently being coached by another (paid??) party) his 'investors' have (he claims) "...done over and over for months now..." and I wanted some proof, since I had not heard of this in my area, my county.

I ultimately looked at public record. I figured I could find a "bulk sale" easily if it existed in Wake county. I lookled at each deed transfer from Fannie Mae (technically FEDERAL NATIONAL MTG ASSN) to anyone. I found 699 transfers in my county since 2008. I isolated the "anyone" part then sorted and looked for individuals or companies buying "in bulk". (This whole process is pretty easy on a Linux machine using standard stream filter and stream editing tools.) What I found was that no person or company bought more than two Fannie Mae properties except for one company that bought 4 Fannie Mae properties in 4 different months in 2009. Buying a property at a time, up to a max of two properties is hardly what I would call "bulk."

The myth of the existence of past Fannie Mae bulk sales (or pool sales) in Wake county, NC: BUSTED