REO Property - Bank vs FNMA

[Chris Garrett]

I understand that the majority of loans in the US are backed by FNMA or FHLMC. What I'm confused about is what dictates who ends up with the property after it's foreclosed upon and becomes an REO. For instance, if the mortgage for a property is backed by FNMA and the property ends up as an REO, does FNMA now have possession of the property, or does it go back to the bank who originated the loan?

[Brandon Sturgill]

Fannie and Freddie don't back loans...FHA insures loans...Fannie and Freddie are more of a "pass through" and more involved with selling conforming loans and distributing cash...while a lot of folks see Fannie and Freddie as government entities, that's only a recent change...pre Dodd-Frank these guys were "quasi-government" and who knows what the hell was going on under their roofs. Here is a better overview: https://www.fhfa.gov/SupervisionRegulation/FannieM...

The banks that originated the loan has already packaged and sold it, so no further involvement from them...and there are long-standing broker relationships from a few large firms that represent almost all FHA-insured foreclosures...there is more to this, but this is the general overview @Chris Garrett