WHAT THE HECK? Fannie Mae being shady?

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WHAT THE HECK? Fannie Mae being shady?

Courtney M.
Investor · Los Angeles, CA · Member since 2016 · 42 posts · 10 votes

Hey guys! I am in the process of getting an REO under contract through Fannie Mae, and LAST MINUTE they sent me this bogus Real Estate Purchase Addendum that TOTALLY negates the terms in our agreed upon offer.....

My agent is telling me its "standard" - but I am refusing to sign unless it can be modified in a way that doesn't contradict VERY IMPORTANT TERMS in our agreement. Basically they now want me to forfeit my earnest money after inspection if I don't like the condition of the house. But that ISN'T what we agreed upon. And verbally they are like "oh ya, well this is just a form, of course you'll get your earnest money back if you don't like the inspection" but thats NOT what the addendum says, and I care little for "taking someones word".... 

My agent is telling me that they just "won't" change the addendum and I have to sign if I want the house. My attorney says don't sign unless they make his suggested modifications. I'm being told that this is just the way REO's are.....is that true? They all agree to one set of terms and then sneak in a new addendum last minute? At 5pm on a FRIDAY none the less when they want it returned Monday AM.....And of course they increased the earnest money to 10% instead of 3%....

"The purchaser waives the right to avoid the sale based on the condition of the property" are the exact words that are giving me pause in signing that addendum. Despite the fact that the offer gives clear instructions on 10 day due diligence yada yada. And of course the addendum supersedes the contract/offer.

Any one know whats up? 

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10y

@Courtney M. Obviously this "REO Addendum which overrides the purchase agreement" is new to you. It's not new to the rest of us, and is standard on EVERY REO that is sold. Your agent is ignorant on REO properties if they didn't know this. I'll grant that I don't remember that "can not avoid the sale due to condition", and it is a little odd. The "seller won't reduce the price or do repairs" is typical. You WILL get your EM back as long as you do your inspections and cancelation on time, as per the addendum. To be clear, they did not "accept" your contract first. Understand that what you consider a "counter" is not actually a "counter offer" that you can accept....it is simply the terms they will accept, if you offer them. Again, your agent should have explained this to you.

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  • John Newhall
    Real Estate Agent · Bloomington, MN · Member since 2015 · 87 posts · 30 votes
    10y

    It's been 2 years since I was involved in a Fannie Mae sale but the addendum used to be pretty straight forward-

    The closing of this sale shall constitute acknowledgement by the Purchaser that Purchaser had the opportunity to retain an independent, qualified professional to inspect the Property and that the condition of the Property is acceptable to the Purchaser. The Purchaser agrees that the Seller shall have no liability for any claims or losses the Purchaser or the Purchaser's successors or assigns may incur as a result of construction or other defects which may now or hereafter exist with respect to the Property.

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    10y

    You mentioned that the EM was 10% of the purchase. What kind of numbers are we talking about 150k so 15k EM?

    Here's what I tend to do when I see stupidity like that from a seller (i.e. two documents that contradict what each one is saying - or when what they are verbally saying but the form says something different).  I cross out their nonsense and/or add a key word to change the phrase and send it back.

    They are specifically saying you will get your money back. The REPA says you will get your money back. But the addendum suggests otherwise. 

    If it were me and I was only doing the deal contingent on passing an inspection, I would add a word or phrase to the addendum and initial.

    "any right to avoid this sale after the inspection period or reduce the price or hold the seller responsible for damages on account of the condition of the property. " MRH

    Add that phrase and sign it. Then let them tell you why they can't accept it. They have specifically told you you can get your money back if the inspection is done during that period and you find something you don't like. So why would they object to that revision?

    That being said. At the end of the day, its an REO. For the most part, its their way or the highway. Just get your inspector in there today and find out if there's anything there to cause you to back out.

    I'm not sure why you didn't just have that done over that previous weekend as soon as you found out they were sneaking that addendum in on you. I'd have had someone out there asap and then either agreed to their stuff or backed out if I found something I didn't like.

    But it makes no sense to drag it out like this on the contract. Somebody else is going to jump in front of you. 

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  • Courtney M.
    OP
    Investor · Los Angeles, CA · Member since 2016 · 42 posts · 10 votes
    10y

    @Mike H. - they wouldnt let me have anyone there over that weekend and the addendum came with the following email from the listing agent...


    "PLEASE DO NOT ALTER THE SELLER ADDENDUM IN ANY WAY, DO NOT ADD, CROSS OUT OR MAKE SIDE NOTES"  - so I couldnt have added the words you suggested. In fact my attorney tried, and the listing agent woudnt submit the changes. 

    Anyways, I can't expect everyone to read all the comments here, but the addendum was signed days ago, inspections were done. I don't know how to close this thread?

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    10y

    Ha.  Yea. I think read thru the first set of pages then and didn't realize this went longer. :-)

    Sounds like it turned out ok though so thats good.

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  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
    10y
    Originally posted by @Wayne Brooks:

    @@Julia Dugger  Not all Fannie offers go in online.  I did one a few months ago, directed to submit to listing agent, never did anything online.

    ALL HomePath offers are to be submitted through HomePath.com, but have to be submitted by an Agent.   If you submitted directly to the agent, then they probably are representing you on the buyer side?  If not they could get into a lot of trouble for circumventing the homepath website.

    Agents submit offers from HomePath into Equator.  FannieMae reviews offers in equator and doesn't review offers in HomePath unless they suspect a problem.

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  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
    10y

    I don't think he was talking about the Standard Addendum.  Occasionally asset managers will make deal specific terms like non-refundable deposits.  It is very risky.

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  • Julia Dugger
    Rental Property Investor · Jacksonville, FL · Member since 2015 · 61 posts · 27 votes
    10y

    I was reminded this week that while all offers on properties listed on HomePath must go through the HomePath Online Offer system, there is one set of exceptions for this -- HECM (Home Equity Conversion Mortgage aka reverse mortgage) properties are not on HomePath and so offers are delivered directly to the listing agent. It sounds like this could have been one of these properties - but they still include the standard addendum.

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