New REO Opportunities - Banks who did not follow Government insured loan criteria

New REO Opportunities - Banks who did not follow Government insured loan criteria

Did you know that if a lender did not follow proper protocol when they created a loan that was insured by VA, FHA, Fannie or Freddie that they might be stuck with the property?

What am I talking about? Well whenever a lender creates a loan that they want insured by FHA, VA, Freddie, or Fannie, they have to meet their requirements for the loan. Each agency has different guidelines that they require be met and process that need to be executed when a loan is originated that they are insuring. If the loan never goes into default, the insurance is never needed, so these defects are not an issue or quite as obvious. However, when the loan goes into default and the lender wants the insurer to reimburse them for their loss, then the underwriting flaws come out.

It is not uncommon for these insurers to refuse to reimburse lenders for loans that did not follow their guidelines. See what happens is when a loan goes into default a lender has to try a variety of different things to prevent a foeclosure with the borrower. Each agency has its own protocols that need to be followed, obviously with tons of paperwork to prove these things occured. (Why some government insured loans take so long to go through the short sale process) Once they meet this criteria they can then pursue foreclosure, but there is no guarantee that the insuring agency will accept their reimbursement request for the amount they are owed or even at all.

There are more and more banks being caught out of compliance with these insuring agencies underwriting guidelines, thus now they have properties they were banking on sending over to FAnnie, Freddie, FHA, or VA and get off their books with money in their pockets.

It makes for a very motivated seller. A lot of these lenders are anxious to sell these REO's quickly and for a discount. In some cases, they might even accept a short sale on these insured loans, so they do not run the risk of the property not qualifying for reimbursement from the insurer. Keep these properties in mind as great discount properties to pursue.

Each area has real estate brokers who have contracts with different lenders to liquidate their REO's, they might offer you a great in on these properties.


If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125