The Purpose and Function of Fannie Mae
- Date: 2008-04-23 - Word Count: 621
Share This!
"Fannie Mae" is the nickname for the Federal National Mortgage Association.
Although it has the "Federal" name in its title, it's actually a separate, chartered corporation that operates in the secondary mortgage market.
In this article, I'll give you the background and history of Fannie Mae, describe typical properties, and show you how to buy those properties for investment purposes.
Fannie Mae's Background
Fannie Mae is a federally chartered organization. Its purpose to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market.
Essentially, Fannie Mae operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have sufficient funds to lend to home buyers at low rates.
Along with Freddie Mac, it's the main secondary lender in the country. As the Fannie Mae web page states, "Our job is to help those who house America."
The History of Fannie Mae
To give you a historical perspective. Fannie Mae was created by President Franklin D. Roosevelt and Congress in 1938. At that time, there wasn't a consistent supply of mortgage funds. As a result of the Depression, millions of families risked losing their homes or couldn't become home owners.
So, the federal government established Fannie Mae to address this need. Its aim was to "expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home."
In 1968, Fannie Mae was re-chartered by Congress as a shareholder-owned company. It's funded solely with private capital raised from investors on Wall Street and around the world.
Types of Fannie Mae Properties
These include all forms of single-family homes such as detached homes, condos, and town houses. The inventory often includes homes in modest to more expensive neighborhoods.
All Fannie Mae homes are sold in an "as-is" condition. These conditions range from good to poor and include "repo's" which may or may not be in poor condition. Note that Fannie Mae sometimes fixes these properties up in order to get a higher price; at other times, it simply leaves them in the same condition.
In order to obtain one of these properties, Fannie Mae secifies that you go through a local realtor.
Real Estate Agents are required to list these properties on the local Multiple Listing Service. Any local agent can show you a property and make the offer for you to Fannie Mae. You can find further listings of Fannie Mae Properties is available online at http://www.mortgagecontent.net
Making Offers to Fannie Mae
The process is the same as with conventional deals. Fannie Mae can accept or reject your offer or make a counter-offer. Typically, there are several rounds of offers and counter-offers. A benefit of negotiating with Fannie Mae is that, unlike HUD or VA negotiations, you're able to add contingencies and other conditions to your offer.
Here are two examples of contingencies:
Example 1: You can ask for a professional home inspection after the offer is accepted.
Example 2: You can negotiate terms, down payment and financing.
Note: Fannie Mae will not accept a contingency that requires the prior sale of a seller's current property.Source: http://www.fanniemae.com
In terms of financing for these properties, Fannie Mae offers its own REO financing, but the terms are usually no better than conventional sources. This means that buyers may be able to get better terms if they come into a deal with outside financing.
Opportunities for Investors
Fannie Mae properties may present good opportunities for you as an investor, particularly in the area of foreclosures. To operate effectively in this market, it pays to know the ins and outs of the federal bureaucracy as well as the latest regulations.
Key Point: Keep up to date on the Fannie Mae market through your own study of its regulations and with the help of an experienced realtor.
Jack Sternberg
Although it has the "Federal" name in its title, it's actually a separate, chartered corporation that operates in the secondary mortgage market.
In this article, I'll give you the background and history of Fannie Mae, describe typical properties, and show you how to buy those properties for investment purposes.
Fannie Mae's Background
Fannie Mae is a federally chartered organization. Its purpose to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market.
Essentially, Fannie Mae operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have sufficient funds to lend to home buyers at low rates.
Along with Freddie Mac, it's the main secondary lender in the country. As the Fannie Mae web page states, "Our job is to help those who house America."
The History of Fannie Mae
To give you a historical perspective. Fannie Mae was created by President Franklin D. Roosevelt and Congress in 1938. At that time, there wasn't a consistent supply of mortgage funds. As a result of the Depression, millions of families risked losing their homes or couldn't become home owners.
So, the federal government established Fannie Mae to address this need. Its aim was to "expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home."
In 1968, Fannie Mae was re-chartered by Congress as a shareholder-owned company. It's funded solely with private capital raised from investors on Wall Street and around the world.
Types of Fannie Mae Properties
These include all forms of single-family homes such as detached homes, condos, and town houses. The inventory often includes homes in modest to more expensive neighborhoods.
All Fannie Mae homes are sold in an "as-is" condition. These conditions range from good to poor and include "repo's" which may or may not be in poor condition. Note that Fannie Mae sometimes fixes these properties up in order to get a higher price; at other times, it simply leaves them in the same condition.
In order to obtain one of these properties, Fannie Mae secifies that you go through a local realtor.
Real Estate Agents are required to list these properties on the local Multiple Listing Service. Any local agent can show you a property and make the offer for you to Fannie Mae. You can find further listings of Fannie Mae Properties is available online at http://www.mortgagecontent.net
Making Offers to Fannie Mae
The process is the same as with conventional deals. Fannie Mae can accept or reject your offer or make a counter-offer. Typically, there are several rounds of offers and counter-offers. A benefit of negotiating with Fannie Mae is that, unlike HUD or VA negotiations, you're able to add contingencies and other conditions to your offer.
Here are two examples of contingencies:
Example 1: You can ask for a professional home inspection after the offer is accepted.
Example 2: You can negotiate terms, down payment and financing.
Note: Fannie Mae will not accept a contingency that requires the prior sale of a seller's current property.Source: http://www.fanniemae.com
In terms of financing for these properties, Fannie Mae offers its own REO financing, but the terms are usually no better than conventional sources. This means that buyers may be able to get better terms if they come into a deal with outside financing.
Opportunities for Investors
Fannie Mae properties may present good opportunities for you as an investor, particularly in the area of foreclosures. To operate effectively in this market, it pays to know the ins and outs of the federal bureaucracy as well as the latest regulations.
Key Point: Keep up to date on the Fannie Mae market through your own study of its regulations and with the help of an experienced realtor.
Jack Sternberg
Related Tags: real estate, real, guru, louisiana, fannie mae, metairie, jack sternberg, sternberg, buyers first, buyersfirst, fnma, buyer first, wwwaskjacksternbergcom
Jack Sternberg is a nationally recognized expert on real estate investment and the creator of the renowned "Buyers First Program" who's been in the business for more than 30 years. Sternberg's deals have totaled over $750 million and he's been to the closing table more than 1,500 times. For more, visit http://www.askjacksternberg.com Your Article Search Directory : Find in Articles
Recent articles in this category:
- The Secrets to Getting Low Down Payment Car Insurance
Upon purchase of a new car, there is almost always a requirement to buy an auto insurance policy as - The Wisdom Behind Auto Insurance Comparison Quotes
No one in his right mind would not go for a good deal. In fact, everyone is out on their feet and ru - The Benefits of Auto Insurance Comparisons Florida
Insurance can be expensive. This is something everyone knows about especially in the sunny state of - Auto Insurance Florida: The No-Fault Policy
There are different kinds of car insurance offered by a wide range of providers today. Different sta - Finding the Cheapest Auto Insurance Companies
Everyone is asking and searching for the cheapest auto insurance companies available today. Consider - How do You Compare Private Health Insurance Cover in Australia?
Deciding what is the best and most affordable private health insurance cover can be easy if you take - How Payment Protection Insurance Was Mis-Sold
For over six years the issue of Payment Protection Insurance (PPI) and how it was mis-sold to custom - Finding Quotes For Auto Insurance Online
One of the many concerns when you are shopping for auto insurance is being able to get access to quo - How You Can Find the Best Auto Insurance Online
When it comes to renewing your car insurance you are going to quickly discover that there are a numb - Guidelines For Searching For Auto Insurance Online
The internet can be a great source of discounts and values related to auto insurance. However, many
Most viewed articles in this category:
- Trading Forex With Pivot Points
Forex Pivot Point Trading are used today by Forex Traders and are calculated on the previous days mo - Where To Search For Free Grants
Where do you look for free grants? The search must be thorough or it could be an exercise in futilit - The Connection Between High Blood Pressure and Salt
We are a society of Salt Addicts. It cannot be denied. When you look at the things we do and the pla - Tips For Avoiding HYIP Scams
Before knowing about HYIP Scams, refer to the functioning of HYIP or "High Yield Investment Programs - Getting Credit After Bankruptcy
Consumers do not have to live sans credit following a bankruptcy. By following certain steps consume - Tips For Choosing A Credit Card
Are you looking for that perfect credit card? If so, you may be confused about what exactly to look - Cheap Car Insurance For Teens Online
Many elements determine a car insurance policy. Car insurance companies look at the person's age, hi - What Exactly Is Free Grant Money?
You can apply for free grant money from various government agencies. But where exactly does this mon - Small Business Owners Marketing and Customer Service
Marketing can be time-consuming, but it doesn't have to be hugely expensive now, thanks to the Inter - Apply Online For A Credit Card - How To Choose A Card?
The best type of credit card for you will be dependant on how you intend to use the credit card. Are