Fannie and Freddie playing games with buyers

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Fannie and Freddie playing games with buyers

Thomas Handy
Investor · El Paso, TX · Member since 2009 · 163 posts · 20 votes

I put an offer on a Homepath 4 bedroom home on Monday for $44,000, a $1000 less than the asking price. Also I asked seller to pay $2000 in closing costs. My realtor told me other buyers also made offers about the same time I made my offer.

As for the property, it's a decent home but needs some cosmetic upgrades - paint, carpeting, touch up a few small holes in the interior, replace the screen doors, and replace the tile flooring. The home also has a stove that needs to be cleaned out. The property is 1300 sq feet. Other wise it looks like a good home but had some bad owners.

I'll keep everyone updated on how this goes.

Tom

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
14y
Originally posted by Thomas Handy:

The first offer I put in on a different home I low balled and they didn't even counter. Then I resubmitted an offer for 25% less than their offer and they countered for the asking price. Then a few weeks later they lowered the price to $5000 on what I offered.

This is all standard, and not at all playing games...

If you put in a low offer on one of my houses, I wouldn't counter either -- countering a low offer is bad negotiating strategy. And countering at full-price when you offer 25% of full-price is perfectly reasonable as well -- they want to see if you're serious about coming anywhere near full-price and that's their way of giving you a second chance as opposed to just rejecting your offer; again, something I'd do on one of my properties.

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  • James Martin
    Property Management · Memphis, TN · Member since 2009 · 668 posts · 362 votes
    14y

    Hello Thomas, can you tell me what games fannie are playing. From my experience dealing with fannie, your offer has a 5% chance of being accepted. The reason why I am saying this is bc of the $2,000 closing cost. Other helpful information would be how long it been on the market, what the ARV, the demand for property in your market and so on.

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  • Mike Jakobczak
    Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes
    14y

    Yea I'd remove the 2000 closing cost condition. But hopefully you get it.

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  • Drew Dickinson
    Involved In Real Estate · Yardley, PA · Member since 2012 · 33 posts · 3 votes
    14y

    Anyone know how they go about enforcing the $10000 fine they threaten you with if you don't move into the property within 60 days if you buying as an owner off? My fiance (who doesn't currently own a home, so technically she could be an own occ buyer on paper) is about to put an offer on a great deal in city. How will they know if she moves in within 60 days? Regardless, the deal is so good, a 10k fine might be still be ok. Further, it would probably be worth holding for a year to rehab and flip if we got it anywhere close to their asking price.... Also, any more hints on getting these Homepath offers accepted? Thanks for any and all info.

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  • Nathan Emmert
    Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
    14y
    Originally posted by Drew Dickinson:
    Anyone know how they go about enforcing the $10000 fine they threaten you with if you don't move into the property within 60 days if you buying as an owner off? My fiance (who doesn't currently own a home, so technically she could be an own occ buyer on paper) is about to put an offer on a great deal in city. How will they know if she moves in within 60 days? Regardless, the deal is so good, a 10k fine might be still be ok. Further, it would probably be worth holding for a year to rehab and flip if we got it anywhere close to their asking price.... Also, any more hints on getting these Homepath offers accepted? Thanks for any and all info.

    So basically you want to commit mortgage fraud and you're asking us to evaluate the risk involved in your illegal activities? Eh, no thanks...

    As to the OP... what "games" (per your title) are being played? Freddie/Fannie have a responsibility to get the most they can for the homes they're selling, that's their job.

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  • Drew Dickinson
    Involved In Real Estate · Yardley, PA · Member since 2012 · 33 posts · 3 votes
    14y

    HAHA. So many are so quick to add their little snide remarks and judgments. I have never comitted mortgage fraud and never will. If she bought the house, we'd eventually move into it if that is what it would take to satisfy the agreement. However, the place is a disaster and who knows how long it would take to get it liveable. It would definitely take longer than 60 days. Especially if it had to be torn down.

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  • Danny Day
    Developer · Houston, TX · Member since 2008 · 488 posts · 121 votes
    14y

    Drew, most likely you won't be able to purchase with conventional financing if thats the case - which will rule out other owner occupants as well. Non-profits might have a shot at the house before you purchase as an investor.

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  • Andy Chu
    Involved In Real Estate · Las Vegas, NV · Member since 2010 · 341 posts · 86 votes
    14y

    We haven't seen Fannie Mae go back and check. However, when closing, make sure the mailing address and property address match up, that is usually a sign that it's an investment property.

    Also, owner occupied could also reference to a 2nd home purchase, which by definition, your primary must be 50 miles away from the 2nd home. From our experience, we havent seen them enforce it.

    In this situation, it may make sense. Good luck!!!

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    You won't see a compliance review done! As a quasi government agency they can ask for verifications that you will never know about and at closing the borrower signs docs authorizing disclosures, lots of ways to check;

    Mailing address at post office, utility company, motor vehicle registration, insurance docs, bank account even your employer can report, credit cards, other debtors and more...

    And it's not just fannie and freddie, but any financial regulator can pull a compliance audit, state banking authorities, FDIC, CFPB, Comptroller of Currency....etc.

    What constitutes a residence? Declaring it as your primary residence with your address indicating such on legal registrations required will pretty much do it. You don't have to be there. It doesn't have to have all your furniture, just a bed a table and a chair will do, a place to cook and prepare food, food stored, a change of clothes in the closet, soap in the bathroom with a towel. That can pretty well prove someone is living there. Something to cover the aspects of living in a home is all that would be required, you can be in Europe 6 months later on vacation!

    If you get caught, you'll be getting a letter, maybe asking you to come in rather than someone knocking on your door, after all, they don't think you are there anyway....LOL

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  • Drew Dickinson
    Involved In Real Estate · Yardley, PA · Member since 2012 · 33 posts · 3 votes
    14y

    Thanks to all the replies. Much appreciated. And a quasi-apology to Nathan to my snide reply... Upon further review, I guess I can see how someone could deduce that I was trying to defraud someone. But it's not the case.. Just wanna know how far I can go playing their little games while not risking my integrity or livelihood. Sorry if any of the below doesn't look right... My first time using the "advanced reply" function in the forum.

    Drew, most likely you won't be able to purchase with conventional financing if thats the case - which will rule out other owner occupants as well. Non-profits might have a shot at the house before you purchase as an investor.

    Thanks Dan. Was not sure how they work their "pre approved for Homepath Renovation Loan" program. Was gonna look into that as well. THe place could definitely be a nice rehab with it's current bones. However, most of the places around it are torn down rows with rebuilt condos. This place is the original brick row. As for the non-profit/owner occ "First Look," you're right. For the first 15 days, only non-investor offers will be reviewed.

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  • Thomas Handy
    OP
    Investor · El Paso, TX · Member since 2009 · 163 posts · 20 votes
    14y

    James Martin, Mike Jakobczak and Nathan Emmert, thank you for your comments and suggestions. Look like I missed out on this deal but I'm holding out in case the current deal falls through.

    My realtor said that has happened a lot to HomePath homes. The homes end up back on the market for whatever reason.

    I've put in three offers over the past month or so and it seems like Fannie Mae and Freddie Mac are playing games.

    The first offer I put in on a different home I low balled and they didn't even counter. Then I resubmitted an offer for 25% less than their offer and they countered for the asking price. Then a few weeks later they lowered the price to $5000 on what I offered.

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    14y

    So Thomas, if a seller doesn't accept your lowball offer their playing games? Based on the information you provided it seems like your the one playing games!

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  • Thomas Handy
    OP
    Investor · El Paso, TX · Member since 2009 · 163 posts · 20 votes
    14y

    Don Konipol In response to your question, yes and no. I don't want to over pay for a property especially if it's a foreclosure. If the property needed no repairs and I made a low ball offer, then yes I'm playing a game with them. But in the properties I looked at I would pay additional money to make the homes rent ready to my standards. I don't think I could be a slim lord.

    Tom

    1Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Thomas Handy:

    The first offer I put in on a different home I low balled and they didn't even counter. Then I resubmitted an offer for 25% less than their offer and they countered for the asking price. Then a few weeks later they lowered the price to $5000 on what I offered.

    This is all standard, and not at all playing games...

    If you put in a low offer on one of my houses, I wouldn't counter either -- countering a low offer is bad negotiating strategy. And countering at full-price when you offer 25% of full-price is perfectly reasonable as well -- they want to see if you're serious about coming anywhere near full-price and that's their way of giving you a second chance as opposed to just rejecting your offer; again, something I'd do on one of my properties.

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    2Reply
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