Fannie Mae and Freddie Mac altered one of their policies relating to the sale of real estate owned properties in their current inventory, permitting the two companies to sell existing REO properties to any qualified purchaser at the property’s fair-market value, as determined by the enterprises. 

However, this move is not a huge change in the overall picture — sales are still limited to owner occupancy.

It still stands that former borrowers must wait a minimum of three years after a foreclosure to be eligible to receive a loan purchased or guaranteed by Fannie Mae or Freddie Mac. 

Also, an owner must still use the purchase of an REO property for the benefit of the previous owner as their principal place of residence.  

So what’s new?

Previously, the enterprises required homeowners who have been through foreclosure and want to buy their home back to pay the entire amount owed on the mortgage. 

This requirement similarly applied to anyone buying the home for the benefit of the previous homeowner.

With the new policy for existing REO properties, former homeowners who are able to repurchase their home – or a third-party able to purchase on their behalf – may do so under the fair-market value policy that already applies to other purchasers of REO properties.  

The new change is limited to Fannie Mae and Freddie Mac REO inventory of single-family homes as of Nov. 25, 2014. 

“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said Federal Housing Finance Agency Director Mel Watt.  “It expands the number of potential buyers of REO properties and is consistent with the Enterprises’ practice of requiring fair-market value for those properties.”