Deb

The Fannie/Freddie Heist

On a Fannie-owned foreclosures, Seller terms need to include not only what they are offering now "Cash or Conventional," but the currently omitted mortgage types of FHA (typically needs 3% of Buyer's money or a gift) and VA (veterans benefits include being able to buy "zero-down.").
FHA and VA buyers need acceptable credit scores showing the borrower pays their bills, not just "blood-pressure and a 6-pack of Coca-Cola" (as in "sub-prime" mortgages of fame in the current crisis).
If the home needs repairs, then have in advance of offering "for sale" an FHA/VA approved inspector preview the property and write up a list of repairs and have some escrow arrangement from the repairs being included in the purchase price so the repairs can be made, from the escrow at the Buyer's expense (from approved-in-advance written estimates), once the buyer owns the home. (Funds released only after work completed by whichever contractor, etc. Not hard to manage...we do this on roof replacement for properties sold in the winter, for example).
This will allow more financially qualified Buyers to compete for purchasing the foreclosed Fannie owned properties and help keep the prices from dropping down to a level where the the majority of Buyers are investors (Most owner-occupied home-buyers do not have cash or first-time Buyers typically do not have 20% down). I have seen Fannie owned property without any repairs needed being offered only "Cash or Conventional" and rejecting an offer of FHA that netted them out notably more than their offered terms. They rejected the FHA and continued to offer "For Sale" at about 20% less. Go figure. (And let me throw in that their offer pre-review worksheet is idiotic. Poorly designed work-sheet results in good offers not even being looked at by Fannie, but are rejected by a "gate-keeper"). Knowing they were getting an offer within 24 to 48 hours, Fannie none-the-less (becasue it was on their "schedule" to do so, immediately sent a particular property over to "pre-auction" status, meaning the Buyer would need to pay an additional fee of 5%, called a "Buyer's Premium" on top of the offering price. This 5% fee is in addition to the real estate commission. (As you may have guessed that particaulr transaction didn't materialize and Fannie continued to offer the property "For Sale." Our future tax dollars at work!!!
Fannie doesn't have to make good decisions; the Gov't has told them they are too big to fail.