What’s Up With Fannie Mae List Prices?

If you’ve been looking for houses the past 6-8 months you’ve noticed there isn’t much inventory and prices are going up. Well, Fannie Mae is onto this and has been trying to prop up the market even more.

Go ahead and search the Fannie Mae listings. Search Here

Now run search on closed and even active comparables around it.

Anything look funny?

Yeah, Fannie Mae is adding anywhere from 20-30% of market value to their listings. While the market is going up there is only a slight chance most of these will appraise.

Not only are they doing this with REOs but there are reports of this happening with short sale approval prices. View here, here, and here.

The Why And The How

• Fannie Mae holds the majority of serviced and delinquent homes (GSEs and HUD own or insure 90% of all loans). By holding most of the active and shadow inventory Fannie believes they can control the market. To an extent this is true.
• A slow leak of homes while jacking up prices will take less of a hit on their books.
• Nearly all of Fannie Mae properties may be purchased with the HomePath Mortgage. HomePath mortages don’t require an appraisal. The down is less than FHA and there isn’t any mortgage insurance. So a buyer sees an overpriced house that won’t appraise but knows they can get it by using a HomePath mortgage.

Buyers not using HomePath aren’t going to be too happy with these price increases but can you really blame Fannie Mae? They’re leveraging market conditions and inventory to their advantage. Would we berate a normal seller doing this or is it different because tax payer money is involved?

What do you think?

If you have questions about buying or selling a home in Reno or Sparks contact Broker Kristopher Kent at (775) 870-4280 or Kris@Reno-Realty.com