New Fannie Mae policy hurts local foreclosure sales
Fannie Mae has said that it will not accept loans for foreclosure properties still under a redemption period, a policy that local agents say could cripple lender-owned sales.
Foreclosures all come with a set period in which a borrower can reclaim the property upon payment of amounts owed. In most states, that period ranges from 30 days to six months; in Alabama, it's a year, according to agents.
Effective May 27, Fannie Mae considers unexpired redemption periods an unacceptable title defect, meaning that property is not eligible for a Fannie Mae conventional loan until the redemption period expires.
Local agents used to remedy the title issue by getting additional insurance coverage such as a surety bond or redemption bond, but Fannie Mae has said those bonds will not be accepted.
"I have been waiting for exactly this to happen for several years because (Alabama foreclosure properties) don't have a clear title," said Jeff Newman, executive director of the Mobile Area Association of Realtors. "Mississippi has 30 days, and some states don't have any time limit."
For more, see the article from al.com>
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