Bank Owned Foreclosure – A Play on Words?  

It is very common to associate a foreclosure with a bank, and this idea is reinforced when we see advertisements for “bank owned” properties.  Mistakenly, we also believe banks are taking the biggest financial hit when a house is sold as a foreclosure.  However, the fact is that in many cases a foreclosure is not owned by a bank.  If not the bank, then who owns these distressed properties and takes the financial  loss?

Understanding Fannie Mae and Freddie Mac

Fannie Mae (Federal National Mortgage Association) was created in 1938 during the Great Depression by Franklin D. Roosevelt, set up as a government-sponsored enterprise(GSE), and later converted into a publicly traded company in 1968.  Freddie Mac (Federal Home Loan Mortgage Corp.)  was founded in 1970 so Fannie Mae wouldn’t have a monopoly on government-backed mortgages. Their collective purpose is to buy mortgages from savings and loans, banks and lenders to provide cash for more mortgages.  The mortgages purchased by Fannie Mae and Freddie Mac are packaged into mortgage back securities(MBS) through a process called securitization. This process transforms realtively illiquid loans into highly liquid securities.  Therefore, the bank or lender who originates your loan or that services the loan by collecting monthly payment is probably not the entity that owns the note.

While relatively unknown to the general public, the significance of Fannie Mae and Freddie Mac to the mortgage market cannot be underestimated.  Combined they hold approximately $5 trillion of  mortgages, about half of the nation’s home loans. Losses to Fannie Mae and Freddie Mac are expected to approach $400 billion before the foreclosure crisis ends.  The graph to the right from The Cromford Report shows the percentage of distressed sales by city, many of which were owned by Fannie Mae and Freddie Mac.

Who really pays for foreclosures?

On September 7, 2008,  Fannie Mae and Freddie Mac were placed into conservatorship.  The federal government now explicitly guarantees debt issued by Fannie Mae and Freddie Mac.

In a Jan. 2011 article from the Arizona Republic, Anthony Sanders, a former professor of real estate and finance at ASU stated, “Fannie and Freddie losses are passed onto the taxpayers.”

If you want to know if your loan is owned by Fannie Mae or Freddie Mac, click here.  I found out that my loan is owned by Freddie Mac, not the company I mail a check to every month.

The next time you are driving around and see a  HomePath or HomeSteps foreclosure rider on a Phoenix real estate sign, you can be assured that it is a Fannie Mae or Freddie Mac foreclosure, not a bank owned property. Additionally, it is not any bank that is taking the loss but the US government,  and ultimately you and I.

Related Posts:

2012 Real Estate Market Trend

Distressed Property Posts

In search of happily ever after with a Phoenix short sale offer

 Phoenix Waterfront Foreclosures for Sale in Gilbert and Chandler

$999,999 :: 6132 W VICTORIA Place, Chandler AZ, 85226

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5 beds, 4 baths
Home size: 5,877 sq ft
Lot Size: 23,086 sq ft
Added: 02/27/18, Last Updated: 05/25/18
Property Type: Single Family
MLS Number: 5729086
Community: TROVITA
Tract: TROVITA
The price of this listing was last reduced on 5/25/2018 by 7%
Status: Active


THIS PROPERTY IS LOCATED IN THE PRESTIGIOUS GATED COMMUNITY OF TROVITA. THIS GORGEOUS BASEMENT HOME FEATURES 5 BEDROOMS, 5 BATHS AND OVER 5800 SQUARE FEET OF LIVING SPACE. THE BASEMENT IS A WALK OUT DESIGN WHICH IS VERY RARE FOR THIS AREA AND IT HAS ALL THE UPGRADES YOU CAN IMAGINE, INCLUDING AN OVERSIZED 4 CAR GARAGE, PRIVATE POOL/SPA, HUGE MASTER WITH GIANT WALK IN CLOSET, HIS AND HER SINKS. ALSO ONE OF THE BEDROOMS COULD ALSO BE AN OFFICE WITH ITS OWN ENTRY DOOR. THIS ONE WONT LAST LONG. SEE PRIVATE REMARKS FOR AUCTION INSTRUCTIONS AND GATE CODE. Buyer must complete all due diligence and research property history prior to making an offer. Property is sold AS-IS.

Listed with HomeSmart


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$368,000 :: 1301 N ASH Court, Chandler AZ, 85224

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5 beds, 2.5 baths
Home size: 2,805 sq ft
Lot Size: 8,712 sq ft
Added: 05/12/18, Last Updated: 05/16/18
Property Type: Single Family
MLS Number: 5765451
Community: ANDERSEN SPRINGS
Tract: ANDERSEN SPRINGS
Status: Conditional


Rare 5 bedroom home in the peaceful subdivision of Anderson Springs with a private pool and spa. Master suite downstairs!! 4 more large bedrooms upstairs. Upgraded kitchen countertops, vaulted ceilings, tons of storage, walk in closet and perfect for entertaining. Enjoy the backyard with your own private pool and spa surrounded by lush green landscape. The home is located in a beautiful lake community with playgrounds, greenbelts, walking paths and quick, easy freeway access. Short walks to schools, parks, shopping and restaurants. Highly desirable Chandler Unified School District, very close to Chandler High School. House directly behind is UNDER CONTRACT for over $400,000. Motivated seller that is ready for a contract. Excellent oppourtunity to upgrade this home in your own style.

Listed with Arizona Premier Realty Homes & Land, LLC


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$429,900 :: 2361 S GLEN Drive, Chandler AZ, 85286

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5 beds, 3 baths
Home size: 3,430 sq ft
Lot Size: 12,196 sq ft
Added: 12/02/17, Last Updated: 05/03/18
Property Type: Single Family
MLS Number: 5694440
Community: EAGLE GLEN 1
Tract: EAGLE GLEN 1
The price of this listing was last reduced on 5/3/2018 by 2%
Status: Active


Huge price reduction!!! Ready to sell! Beautiful home with new carpet, fresh paint, new Stainless Steel appliances ready for a new owner. Backs to the San Tan Vista Trail.

Listed with Realty ONE Group


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$235,900 :: 1328 W BROOKS Street, Chandler AZ, 85224

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3 beds, 2 baths
Home size: 1,558 sq ft
Lot Size: 8,276 sq ft
Added: 04/11/18, Last Updated: 04/11/18
Property Type: Single Family
MLS Number: 5749739
Community: BROOKS CROSSING 2 LOT 55-151
Tract: BROOKS CROSSING 2 LOT 55-151
Status: Active


Corner lot, with a large backyard with RV gate and storage shed. Step inside and check out the brick fireplace in living room, eat in kitchen with a breakfast bar, also small dining are, enclosed patio. Home needs some TLC. Enjoy close proximity to shopping. Property is sold in it's AS-IS Condition.

Listed with Glass House International


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$220,000 :: 5975 W DEL RIO Street, Chandler AZ, 85226

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2 beds, 2 baths
Home size: 1,343 sq ft
Lot Size: 3,484 sq ft
Added: 02/16/18, Last Updated: 03/15/18
Property Type: Single Family
MLS Number: 5724387
Community: LAKESIDE SHORES 2 LOT 1-52 TR
Tract: LAKESIDE SHORES 2 LOT 1-52 TR
The price of this listing was last reduced on 3/15/2018 by 1%
Status: Active


2 bedroom/2 bath home in Lakeside Shores subdivision. Conveniently located near I-10 and Loop 202. Home features North/South exposure, covered patio, split floor plan, garage parking, atrium, 2-way fireplace, wet bar, vaulted ceilings, tile floor and built-in bookshelf. This remarkable property is available for immediate sale. The seller is very responsive and the property is a perfect opportunity. This is a special Fannie Mae property.

Listed with American Allstar Realty


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$275,000 :: 3604 E PHELPS Street, Gilbert AZ, 85295

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4 beds, 3 baths
Home size: 2,143 sq ft
Lot Size: 6,098 sq ft
Added: 05/26/18, Last Updated: 05/26/18
Property Type: Single Family
MLS Number: 5771864
Community: COOLEY STATION PHASE 2
Tract: COOLEY STATION PHASE 2
Status: Active


Beautiful two story home in Gilbert! Open concept floorplan with panoramic windows throughout. Kitchen opens to the living room and has center island with breakfast bar, granite counters, and black appliances. Large loft with ceiling fan at top of stairs! Master retreat has plush carpeting and a spacious walk in closet. Full spa bathroom with dual sink vanity and separate soaking tub + shower. Backyard features an extended covered patio with pavers and plenty of room for entertaining. This home is sure to go fast, so come see it today!

Listed with Revelation Real Estate


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$290,000 :: 326 N CORRINE Drive, Gilbert AZ, 85234

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4 beds, 2 baths
Home size: 2,357 sq ft
Lot Size: 7,840 sq ft
Added: 05/23/18, Last Updated: 05/23/18
Property Type: Single Family
MLS Number: 5769810
Community: STONEBRIDGE LAKES ESTATES UNIT
Tract: STONEBRIDGE LAKES ESTATES UNIT
Status: Active


Priced to sell immediately!!! This very high demand Stonebridge Lakes estate oozes charm with a private and community pool/spa, stocked lake for fishing and boating, and numerous parks right by the canal! And its just minutes from the totally revamped downtown Gilbert! This one is truly a must see!

Listed with Homesmart


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$260,000 :: 4072 S SHADY Court, Gilbert AZ, 85297

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3 beds, 2 baths
Home size: 1,428 sq ft
Lot Size: 7,405 sq ft
Added: 05/18/18, Last Updated: 05/18/18
Property Type: Single Family
MLS Number: 5768313
Community: POWER RANCH NEIGHBORHOOD 4
Tract: POWER RANCH NEIGHBORHOOD 4
Status: Active


Single level 3 BR/2BA home on a quiet Power Ranch cul-de-sac. Great room floor plan. Grass yard and green belt. Close walking distance to elementary school and community park areas. Miles of walking/hiking trails and community/recreational amenities in Power Ranch. OWNED solar panels, water softener and RO systems.

Listed with Keller Williams Northern AZ


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$359,900 :: 983 N SUNNYVALE Avenue, Gilbert AZ, 85234

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4 beds, 3 baths
Home size: 2,375 sq ft
Lot Size: 13,939 sq ft
Added: 04/20/18, Last Updated: 05/18/18
Property Type: Single Family
MLS Number: 5754963
Community: KRISTIN MANOR
Tract: KRISTIN MANOR
The price of this listing was last reduced on 5/18/2018 by 5%
Status: Active


4 bedroom/3 bath home in Kristin Manor on huge cul-de-sac lot. Conveniently located near US-60 and Loop 202. Home features include vaulted ceilings, 3 car garage with cabinets, huge master suite with his & her closets, double sinks and jacuzzi tub, full downstairs bed & bath, tile floors, ceiling fans, open kitchen with island and large pantry, covered patio and wood blinds. This remarkable property is available for immediate sale. The seller is very responsive and the property is a perfect opportunity for all buyer types.

Listed with American Allstar Realty


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


$267,650 :: 916 W SILVER CREEK Road, Gilbert AZ, 85233

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3 beds, 2 baths
Home size: 1,511 sq ft
Lot Size: 5,227 sq ft
Added: 04/26/18, Last Updated: 04/26/18
Property Type: Single Family
MLS Number: 5757053
Community: DAVE BROWN UNIT 5
Tract: DAVE BROWN UNIT 5
Status: Active


Bright and open single story home on a nice lot with mature shade trees.Property features 3 bedrooms, 2 baths, a nice open kitchen with casual diningand a bay window, and a large living room with fireplace. The home could use a little updating but would be a real gem with a little work.

Listed with Real Home Services & Solutions


Brought to you by Gordon Baker, Remax Alliance Group. Call me today at 480-326-8571, or visit my website at www.myhomeinaz.com/!


Additional information about short sales and bank owned property can be found at Phoenix Waterfront Distressed Property