tax return. If the borrower is self-employed, Fannie Mae will need a copy of a year-to-date profit-and-loss statement, all schedules to the tax return, and a copy of any partnership or corporate tax returns, if applicable.

When Fannie Mae receives the complete submission package, it will coordinate with the servicing lender its recommendation and all pertinent loan detail information. Fannie Mae will also coordinate with the mortgage insurance company to determine any pre-claim settlement agreement and negotiate the mitigation of its loss.

Once all the information has been received, Fannie Mae will coordinate with all parties through the servicing lender any requirements for the borrower to participate in the reduction of any potential loss to Fannie Mae.

Earnest Money Agreements

Any earnest money agreements requiring repairs or maintenance to the property that the borrower/owner cannot financially afford to complete must be explained. Two written bids must be submitted with the agreement to Fannie Mae for their inclusion in the short payoff. (A short payoff is the same as a cram down.)

When Fannie Mae has received an agreement on the proposed pre-foreclosure sale, it will provide in writing to the servicing lender its approval and authorization for a short payoff. It should be pointed out that Fannie Mae does not actively negotiate or sign any of the purchase agreements. Fannie Mae can only agree to the amount of the loss it will approve. Its intention is to make it as easy as possible for the buying public (that means real estate investors as well as home buyers) and real estate professionals to deal with Fannie Mae.

Questions Most Often Asked by Listing Brokers

If I have been requested to list a home that is in foreclosure, to whom do I present the offer? The initial offer on the property must be made to the borrower, who is the owner of the property. The borrower is the seller and must negotiate as such. The earnest money agreement must then be presented, in copy form, to the servicing lender, Fannie Mae, and the mortgage insurer (if applicable), concurrently.

Do I need to submit anything else with the earnest money agreement? No. There are additional items that will be requested from the seller of the property, which could be facilitated by your assistance. Coordinating the distribution of these items can only help expedite the decision-making process. These items include the borrowers financial statements, tax returns to include all schedules, partnership, and corporation returns, if applicable, hardship letter and supportive documentation, copies of the listing agreement, and any change addendums.

What other information does Fannie Mae need? Fannie Mae will request copies of the current payoff statement, collection records, payment history, mortgage insurance information, and the origination documents from the servicing lender. This would also include the original mortgage application package and appraisal.

The servicing lender is also responsible for ordering two independent brokers price opinions. The set must be ordered from two separate sources that are not involved in the listing or sale of the property.

Who will be my contact person during the offer review period?

All contact must be made with the servicing lender. Fannie Maes decision and any loss mitigation will be done through this contact person only. The reason is simple. It is counterproductive for all parties if the listing and selling agents and the seller and buyer are all calling the lender, the mortgage insurer, and Fannie Mae for the current status of the loss review.

If the pre-foreclosure sale submission is distributed in its complete form to all parties concurrently, you can expect a response within two to three weeks. Please allow for this amount of time in your agreements.

Is there a preset limit of the closing costs or discount points Fannie Mae will pay? No. Conventional seller percentage closing costs will be considered in the loss review.

How do I handle repairs that the purchaser wants? All repairs as listed in the earnest money agreement must be presented with two separate specific bids for the items in need of repair. If necessary, these items may be presented and negotiated with the servicing lender and the homeowners insurance company.

Will Fannie Mae consider a sale on an investment property? All

pre-foreclosure offers will be taken under consideration. Whether Fannie Mae will participate in the acceptance of the short payoff will be based on the review of the circumstances in the request. Other remedies may be available that have not been reviewed or explored with the borrower. Fannie Maes staff can give you more information on remedies involving investment properties.

On what factors does Fannie Mae base its loss evaluation? Several items are taken into consideration regarding the acceptance of a loss. The original appraisal and two current brokers price opinions are a part of the evaluation that is done. As mentioned previously, the additional information that is evaluated would be the original mortgage application and the borrowers current financial situation.

Is it worth my time and effort if the property is scheduled for foreclosure within the next few weeks, months, and so on? Yes, it is possible to postpone a foreclosure sale that is scheduled to be conducted if there is an active listing and offers are pending. It is worth all efforts to give borrowers with qualifying hardships all the assistance possible.

Fannie Mae Home Saver Solutions Program

Another loan work-out option used by Fannie Mae is the Home Saver Solutions Program. Since starting this program in 1997, Fannie Mae has spent more than $25 million in work-out incentive fees to lenders from whom it has purchased mortgages.

Fannie Mae pays its lender service providers $500 each time they arrange a deed in lieu of foreclosure. They pay $1,000 each time they arrange a pre-foreclosure sale! Are some of you getting any ideas on how to make some Quick Cash here?

Both of these solutions require the homeowners to move out of the property, but their credit rating will not reflect a foreclosure. Fannie Mae also recommends that its lenders use two other approaches. Both allow the homeowners to keep their property. The first is a repayment plan. The second is loan modification.

Repayment plans generally work when the homeowner is just one month behind. The missed payment is added in increments into future regular monthly mortgage payments.