Buying a Fannie Mae owned property using hard money?

[Chris Robertson]

I am a new investor and I am trying to get an offer accepted on a Fannie Mae Homepath property in Baltimore.  I have had no previous experience with the agent who showed me the property and I get the feeling that she is unfamiliar dealing with investors.  That said, she responded to me promptly and got me out to see the home so I felt I should write my offer with her.

I explained to her that this would not be an owner occupied property and that I would be using a hard money loan from dohardmoney.com.  I had choosen them as my lender because they offered 100% financing by pairing their hard money loan with private gap financing.  This is a requirement for me because this property would be my first deal in real estate and I have little other capital.

My agent told me that I would be required to put $2000 down for my earnest money deposit which I was able to come up with.  Asking price was $150k and we wrote the offer for $145k using the proof of funds letter supplied to me by the lender with two contingencies: firstly, that the financing got final approval following the lender's appraisal and secondly, that the inspection did not reveal anything above my rehab estimate that would blow the budget.  The offer was rejected with no counter.

Will Fannie Mae approve hard money financing deals?  If I had a larger (10%?) earnest money deposit could I get this approved?  Thanks in advance guys, If there is anyway to make this deal work I want to salvage it!

[Jon Holdman]

For a financed offer you need a pre-approval letter from your lender.  Was your "proof of funds" letter one you printed off the net without doing any paperwork?  If so, the seller probably recognized it as worthless.  Resubmit your offer as financed with an actual pre-approval letter.