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NEED HELP WITH THE FANNIE MAE/REO ADDENDUM

Posted by KARLA ELKEBIR on April 27, 2011 at 11:51am in Short Sale Discussions

An investor making an offer on a Fannie Mae property, the listing agent has requested that a 13 or so page addendum be filled out by the buyer/investor to come with the offer before presenting it, is this correct? and since he is an investor, Fannie Mae's addendum states that he cannot sell the property for the next 120 days after closing, they call it a DEED Restriction. I thought I heard about something like this, not sure though. It sounds like all investors would have to sing this addendum when making /buying a Fannie Mae Property.Is this pretty standard?any input would help. Thanks.

 


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Replies

  • John Juarez May 3, 2011 at 5:51pm
    The deed restriction is on the recorded document. If a subsequent buyer wishes to get title insurance – who would risk going without insuring that the title is clear? – The restriction will come up and title insurance will not be available until the restrictive period has lapsed.
  • TC Bland May 1, 2011 at 6:47am
    Hey Jeff - we've been told that CoreLogic is doing the data-mining for the banks.

    Jeff Payne said:
    I dont think that there is any price fixing, it is only for 90 days and also quite a stretch to think that there is that much profit available within the first 90 days so the clause really means nothing.  Anyone know how Fannie Mae would even know if it was sold in the first 90 days?
  • obed montez May 1, 2011 at 5:37am
    I do not think it has anything to do with them doing the monitoring , but wheather another buyer finds out what happen and out of spite report it. The chance of it happening are not out of the question. If there is a chance of something funny going on stay clear. 
  • Vanessa Calhoun April 29, 2011 at 2:46am
    Two of the attornies that I've spoken with about the clause seem to think that it is. Honestly, I don't think that they have the manpower to periodically scour through deed recordings and public records just to monitor what happens to one of their properties after they've sold it.
  • Jeff Payne April 29, 2011 at 2:42am
    I dont think that there is any price fixing, it is only for 90 days and also quite a stretch to think that there is that much profit available within the first 90 days so the clause really means nothing.  Anyone know how Fannie Mae would even know if it was sold in the first 90 days?
  • Vanessa Calhoun April 29, 2011 at 2:29am
    Someone should argue that agreeing to the clause constitutes price fixing, especially if they're in a market with other Fannie properties are listed and are direct competition.
  • Jeff Payne April 29, 2011 at 2:26am
    Smitty, I agree!  The clause is really worthless in my opinion.  If Fannie is selling the property for such a price that it could be flipped by an investor with a 20% return, Fannie again has their head up their fannie
  • Smitty April 28, 2011 at 11:51am
    Karla, are they realistically going to make more than 20% profit?  On a purchase of $200,000 that's $40,000 and keep in mind that's NET profit.  So even if they resold at $325,000 you'd still be in the clear as you would likely be deducting let's say $60,000 in rehab costs, $5000 holding costs, $6% commission, $2500 lawyers and title fees.  Do the math... You're still under that 20% profit margin.
  • Jeff Payne April 28, 2011 at 11:29am
    It is only for 90 days, does the investor have someone ready to buy it now?  The clause does not say they can not resell it, just cant resell it for more than 20% more than what they paid for it.  Not sure how they would find out though
  • KARLA ELKEBIR April 28, 2011 at 11:22am
    Yes,my office has the investor(buyer) and the selling agent was asked to have her buyer fill this form out before presenting offer. the investor is not agreeing to this clause. We'll see what happens. Thanks!

    Jeff Payne said:

    Is this what you are asking for?  I just sold a Fannie REO for $265,000 and this was part of the investor clause, not part of the owner occupied contract.



    GRANTEE HEREIN SHALL BE PROHIBITED FROM CONVEYING CAPTIONED PROPERTY FOR VALUE FOR A SALES

    PRICE OF GREATER THAN $_318000________________FOR A PERIOD OF__3____MONTH(S) FROM THE DATE OF THIS

    DEED. GRANTEE SHALL ALSO BE PROHIBITED FROM ENCUMBERING SUBJECT PROPERTY WITH A SECURITY

    INTEREST IN THE PRINCIPAL AMOUNT OF GREATER THAN $_______318000___________FOR A PERIOD

    OF__3____MONTH(S) FROM THE DATE OF THIS DEED. THESE RESTRICTIONS SHALL RUN WITH THE LAND AND

    ARE NOT PERSONAL TO GRANTEE.

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