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Fannie Mae and Freddie Mac were created by Congress. They perform an important role in the nation's housing finance system \u2013 to provide liquidity, stability and affordability to the mortgage market.
\u201cArm's length\u201d is an expression which is commonly used to refer to transactions in which two or more unrelated and unaffiliated parties agree to do business, acting independently and in their self-interest.
For a regular home sale, the seller would use the proceeds to pay off the original loan. In a short sale, the home sells for less than the seller owes, so the lender won't get all their money back. As a result, the original lender must agree to the sale. The seller must prove they have no other option.
Arm's length transactions allow both parties to act in their self-interest, while non-arm's length transactions can result in either party using their relationship to affect the sales price of the object.
Fannie Mae's mandatory waiting period after bankruptcy, short sale, & pre-foreclosure is just 2 years. Editor's note: Fannie Mae instituted these changes in July 2014 and they are still in effect.
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A non-arm's length transaction occurs when the buyer and seller have a personal relationship. A deal between friends, family or co-workers is considered to be a non-arm's length transaction. With these home sales, self-interest may not be the motivation, for instance, when parents sell their home to an adult child.
Cash back on purchase transaction Mortgages The Borrower may receive cash back, or a principal curtailment may be made, only as a result of the following: Reimbursement for the overpayment of costs, fees and charges paid by the Borrower in connection with the purchase transaction Mortgage.
The Federal National Mortgage Association (FNMA), typically known as Fannie Mae, is a government-sponsored enterprise (GSE) founded in 1938 by Congress during the Great Depression as part of the New Deal.
Homebuyers must also meet minimum credit requirements to be eligible for Fannie Mae-backed mortgages. For a single-family home that is a primary residence, a FICO score of at least 620 for fixed rate loans and 640 for adjustable rate mortgages (ARMs) is required.
Non-arm's length transactions are purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property.

non arm's length transaction fannie mae