Like every other third party mortgage investor on the planet, Fannie Mae has had a rough time lately. When Wall Street finally stopped buying sub-prime loans Fannie Mae found themselves holding millions of un-sellable mortgages…essentially holding the bag.

Was it greed that created this situation?

That is too easy of an answer. The truth is the system was set up for people who are responsible for the increase in the value of a company, to keep up with their investors desires for ever growing profits as compared to their competition.

In other words, they have to keep up with the “Jones’” or their companies will lose share value, their investors (you and me) will lose their investment in the company and the executives will lose their jobs fir not satisfying the company mandate of growth or shareholder value.

Essentially, Fannie Mae business decisions were made driven by a purely profit motive.

Fannie Mae Foreclosures: The Perfect Storm

The CEO of Fannie Mae had to keep up with the CEO’s of Freddie Mac and all the other smaller mortgage investors or the world would have stopped working in their view. It was either “grow profits at all costs” or they believed they would have died long ago and the situation would have become worse than “Not Working” …it would have been broken.

Was the environment created political?

Yes and no.

Many believe that if the political climate for these sub-prime loans had not been created, the past market conditions would not have happened. Without the politics, millions of homeowners would still be renters not homeowners. This is somewhat simplistic, the problem is really more of a combination of corollary events that when assembled in a particular order created a “Perfect Storm” of Greed and Fear among Lenders, Homeowners and Mortgage Professionals.

This “Perfect Storm” is why Fannie Mae has been forced to foreclose on so many houses in the past two years. Currently Fannie Mae has more foreclosures on the negative side of their books than ever before….the wake of the storm so to speak.

The same perfect storm has caused Fannie Mae stocks to sink like a stone, with millions of foreclosures and people losing their homes in record numbers compounded by job cuts throughout the financial and housing industries, this rippling effect will be felt for years to come by Fannie Mae.

These are not the signs of greed or political mistakes. These are the outcroppings of a fatal combination of Greed and Fear.

This same combination of raw human emotions have been seen throughout history and are not relegated to the financial industry, big business, politics or the times we live in.

Foreclosure Properties: An Excellent Investment Opportunity

Remember when it was cool to be a Dotcommer? Before that bust there was oil, tulips and several others. Real Estate in the early 90’s saw the same type of collapse in Britain. As a result, the British Government put in safety measurements to stave off another housing implosion but the measures couldn’t stand up against the Fear and Greed that often motivates human behavior.

We have all felt the effects of the housing downturn and the money we have all lost in the stock market, our 401k’s, and the reduced equity in our homes.

The best way to counter these negative financial effects is to buy the foreclosures offered by Fannie Mae.

These assets have depressed pricing and offer a great profit opportunity for homebuyers.

For the right buyer, foreclosures are an excellent opportunity to buy a house at a lower than market-value price.

My advice? Make an offer, buy a foreclosure home and enjoy the ride of the next decade of appreciation.

HUD Foreclosures

HUD foreclosures and VA Foreclosures are some of the best homes to buy when price is part of the equation. As with most Americans, price is always a concern. If not buying the same house for less, why not buy more house for the same dollar invested? When looking for a good deal it is hard to do better than the VA or HUD foreclosures market. The simple truth is that there are just more VA and HUD homes on the market, as they represent such a large number of mortgages that are generated each year. This translates into more foreclosures just by the magnitude of difference between all others comparing to the two largest.

The two largest also being government owned and operated means that they have less time to wait to make money back on the home. The FHA is especially known for selling HUD homes for less than the average sales price in a given area. FHA foreclosures represent a fraction of HUD but they are still a significant number of homes and both should be considered.

VA (Veterans Administration) and HUD (Housing and Urban Development) have different and unique opportunities for the buyer. Both are often forgiven for the local taxes normally associated with the purchase of a home (this is on a county by county basis). Be sure to ask the local title company or escrow company to look into it for you before closing as this is often missed due to their are not used to dealing with the 2 to 3 percent of the market that VA and HUD foreclosures represent.

Foreclosure Listings Increasing

As the market settled after the mortgage meltdown foreclosure listings also settled and fewer homes were on the market with a placard reading “Bank Foreclosure” in big red lettering. This was a good thing for the entire real estate market. Having an abundance of foreclosures brings the entire market down and it makes it harder for home owners, who would like to move, to get the appropriate price for their home as a similar home down the same street was sold for substantially less and the appraiser is using the foreclosure as a comparable sale.

This is just one of the problems when there are too many foreclosure listings in any area. Another issue is the television set that sits in everyone’s living room harping about the price of homes based on the number of foreclosures and this constant barrage of negative information makes most people sit on the sidelines waiting for the market to either implode completely or to correct itself. Meanwhile while they wait, others are buying foreclosure listings and making great investments.

Whatever the reason, a market can only handle so many foreclosure listings at any given time. The more foreclosures, the lower the market gets and this is a lesson the banks that were foreclosing and selling off realized too late. The market and their investments would have been better off if there had not been a rush to divest themselves of the toxic assets made more toxic by their own actions.