Fannie Mae Approved REO Vendors: Agents, Brokers & Contractors

Fannie Mae executes a Master Listing Agreement with either the principal broker or owner of the company to which the agent chosen to manage its REO listing belongs. This document contains the details defining the relationship between Fannie Mae and the broker. It must be executed and be on file before FNMA can proceed to assign a HomePath REO property listing to a listing broker.

An REO agent handles pretty much everything on a Fannie Mae REO home till it is successfully sold. The agents and brokers that handle listings are chosen from those service provider pre-screened and signed-up by Fannie Mae. A listing agent is primarily chosen based on their proximity to the property, while also factoring their professional’s experience and ability. As a broker plays a critical role in the sale of an REO property, Fannie Mae places due importance on their selection before assigning an REO home for listing. The inventory of REO homes FNMA owns are distributed in a balanced way between all its service providers taking their past performance, experience, qualifications, and ability into consideration.

Fannie Mae REO Sales Guide

The sales guide is a great reference for listing broker managing the selling of FNMA REOs. This guide is frequently updated to keep all REO vendors informed about any changes to the procedures commonly involved. The Section I of the Fannie Mae REO Sales Guide explains all the procedures an REO agent or broker must follow when handling a property assigned to them for listing and selling. Fannie Mae outsources some of its repossessed REO homes to an external Asset Management Provider (AMP) for management. These AMPs also employ REO brokers to handle Fannie Mae HomePath listings.

FNMA plans its REO property marketing strategy with the inputs from AMPs, listing brokers, BPOs, and appraisers. The ideal strategy will aspire to minimize Fannie Mae’s losses while having little impact on the local real estate market in which the property is located.

To successfully sell off the repossessed homes its owns, Fannie Mae needs a thorough and effective sales strategy. They rely on their REO brokers to provide them with as much relevant information as possible about the property and the local market. The more it knows, the better will be its ability to suitably price, which leads to a quicker sale.

Any real estate broker or a company can sign-up as a prospective supplier to Fannie Mae REO department provided they meet the following minimum qualification requirements. All suppliers need to register and submit all necessary documentation required by FNMA. The company signed up to be an REO vendor must have been in business for at least one year prior to application. The REO vendor must have generated revenue for the year with no more than 70% coming from Fannie Mae directly. A professional office with a registered address is also required. This information is necessary to submit a complete REO vendor or agent application to FNMA. A W-9 with tax info along with a certificate of insurance (Errors and Omissions) is also required. The insurance coverage must be appropriate for the amount and type of business to be performed on REO properties. The REO vendor is required to have at least three employees being paid on W-2 and not 1099. All contractors, vendors, appraisers, agents, brokers, contracts and consultants who seek to provide REO services to Fannie Mae must adhere strictly to its procedures and guidelines.

Bulk REO Deals from Fannie Mae

To succeed as a bulk REO investor, access to capital and consistent supply of REO deals are a must. Establishing good working with well-capitalized investment firms, REO asset management companies, and REO bank departments is necessary to find and close deals on time. Just like any other real estate endeavor, success in bulk REO investing of Fannie Mae homes can be achieved through proper training, planning, and analysis.

Investors interested in acquiring a large number of repossessed REO homes should consider buying Fannie Mae & Freddie Mac bulk REO tapes. REO properties that make up the components of Fannie Mae bulk REO package can be found in any area where the agency has a large number of unsold repo homes in its inventory. Bulk REO tapes can be customized based on geographical area, property price and condition to appeal to the preferences of investors. Homes that need minor repairs to ones that need major and substantial renovation and rehab work can also be bought through Fannie Mae owned REO home listings.

To succeed in bulk REO investing, an investor needs to keep the following points in mind.

  • It’s not easy to become an eligible investor for receiving bulk REO tapes from Fannie Mae.
  • Prior investment experience and access to a large amount of capital are required to get approved. Even smaller deals need funding in excess of seven figures.
  • Investors employing their own capital with no need for outside investment or financing can close on Fannie Mae REO deals quickly. Doing this also allows an investor to profit significantly as Fannie Mae offers large discounts off the principal value on bulk tapes.

Investors are increasingly looking to invest in bulk REO deals as they are often priced well below the market value of individual properties that make up the tapes. A discount of 50-60 cents on the dollar is not uncommon among FNMA bulk REO deals. As the deals need huge capital, the interested investors need to get approved by Fannie Mae REO department before they can expect to receive the bulk REO home listings. Letter of intent and proof of funds are the two pre-requisite documents required by FNMA to determine the eligibility of a potential bulk buyer.

Upon receiving the listings of a bulk REO deal from Fannie Mae, an investor will have a time window of 7-10 days to do proper research and assessment of the condition and market value of the bulk property portfolio. If a certain number of properties don’t match the buyer’s preferences, Fannie Mae will often be willing to replace them with other homes from its listings. The bulk of the homes that make up a tape are single-family residential homes, while commercial and multi-family properties are also present in smaller numbers. A custom bulk REO package with a specific geographic preference, price or condition can be designed by Fannie Mae REO department.

Lately, due to the rising tide of repossessed homes joining the REO inventory at Fannie Mae and other large entities, a lot of attention has been focused towards investing in Bulk REOs. Investors with the right capital and contacts can make substantial profits in a short period of time by buying and selling bulk REO homes. A number of properties that were repossessed by FNMA are grouped together and offered as a bulk package to potential investors.