If you buy a FNMA foreclosure, watch out for the fine print. There’s a new paragraph recently added to the infamous foreclosure rider that could cost you some money.
I’ve written before about how FNMA buys are quirky and about what to watch for when buying one.
Starting in December 2012, the FNMA foreclosure rider that’s required was amended to include this more-than-a-little-overbroad statement:
Par. 10 (e) “Regardless of local custom, requirement or practice the Purchaser shall pay all costs and fees incurred in the transfer of the property, including all lender related costs and recording costs, except as expresly assumed by the Seller in this Addendum.”
This paragraph was not in prior versions of the rider and I don’t know how far FNMA will go to collect from the buyer.
FNMA has to pay for title insurance, pay the real estate commission and give a tax credit under the rider, so those costs are “expressly assumed,” but that’s about it. In the closing I handled, the Seller used Par. 10 to charge my client for state and county transfer stamps and for the $400 cost of obtaining the paid assessment letter from the association. Both of these costs are normally paid by FNMA. But, due to the brand new rider clause my client was stuck paying them.
There is not much that can done to prevent this, except to change the rider under the attorney approval clause (good luck with that). So all of you FNMA buyers out there, please beware that you might be stuck with some extra costs at closing.
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