FNMA Subsidy for REO Purchases

FNMA has announced that they will subsidize closing costs or appliance costs up to 3.5% for purchases of its REO properties listed under the Home Path program, which is FNMA’s REO disposition operation.  The link to that program is www.HomePath.com .  For this incentive properties need to be Owner-Occupied and purchased by May 1, 2010.  Home Path mortgages and renovation mortgages are also available on these properties with as little as 3.0% down payment.

So, while the time frame is short it is another indication of attempts to lighten REO levels.  At the end of September FNMA had 77,275 REO properties, a 7% increase year over year.  More significant however is a noticeable increase in seriously delinquent loans.  Loans three (3) or more payments behind increased a substantial 2.3% in November to 5.29%.  While this offer is only available to Owner-Occupants, it is a good indication to investors that FNMA and others are expecting continued high levels of delinquencies.  Opportunities will continue for both REO and Short Sale investors.