Unwarrantable Property?

[Rob Na]

So here I am thinking I found a pretty good deal on a REO condo that I can rehab and sell under market without many issues.

Turns out, after talking to my mortgage broker, that the property is not on Fannie Mae's list of warranted properties and therefor demands a 10-20% down payment with rates in the 6's for an ARM and 8's for a 30 Fixed.

If its this much trouble to purchase the property for me, then I don't think its a great investment as far as trying to resell it.

Can anyone shed some light on this for me? Do all lenders look at warranted/unwarranted status? Will it be tough to sell because of this quality?