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Fannie Mae Paying Closing Costs on Foreclosures
Buyers have until April 11 to qualify for 3.5% bonus
April 11, 2011
By SAM GARCIA Mortgage Daily
The largest mortgage firm in the country is paying closing costs for buyers of foreclosed properties. But the offer is only good today.
When banks and lenders want to free up cash, they sell their loans to Fannie Mae or cousin Freddie Mac. The two companies, which have been operating under the control of the government since their spectacular failures in 2008, bundle up the loans into mortgage-backed securities and guaranty payment to investors who buy the securities.
When some of the $3.2 trillion in mortgages managed or guaranteed by Fannie don't pay, it can get stuck with the properties after they make it through foreclosure.
In an announcement Monday, the Washington, D.C.-based firm said buyers who place on offer by April 11 on its HomePath properties will get 3.5 percent in closing-cost assistance.
The sale needs to close by June 30, and the buyer needs to occupy the home as a primary residence, according to Fannie Mae -- formally known as the Federal National Mortgage Association. The owner-occupancy requirement gives average folks an edge over real estate investors.
"Attracting qualified buyers to the market and reducing the inventory of vacant homes remains essential to stabilizing neighborhoods and helping the market recover," Fannie Mae executive Terry Edwards said in the announcement.