Fannie Mae and Freddie Mac will soon be selling repossessed homes back to their previous owners for less than what they’d owed on their mortgage when they defaulted.

The mortgage giants’ federal regulator this week ordered them to drop a requirement that homeowners who wanted to buy their home back from Fannie or Freddie repay the entire amount they’d owed on the mortgage. Instead, they’ll be treated just like any other REO buyers, and permitted to buy the home at fair market value.

So if you owed $500,000 on your mortgage when your home was repossessed, and Fannie or Freddie has put it back on the market for $300,000 because its value was wildly inflated during the boom, you could end up back in the same house with a much smaller mortgage — as long as you intend to use that home as your principal place of residence.

Like everyone who’s been through foreclosure, you’ll have to have waited a minimum of three years before you’ll be eligible to finance a home purchase using a loan eligible for purchase or guarantee by Fannie or Freddie. 

The policy change applies to all 121,000 homes in Fannie and Freddie’s inventory of single-family homes as of Nov. 25. 

 

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×