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

$222,000 :: 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: 02/16/18
Property Type: Single Family
MLS Number: 5724387
Community: LAKESIDE SHORES 2 LOT 1-52 TR
Tract: LAKESIDE SHORES 2 LOT 1-52 TR
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/!


$240,000 :: 861 S ITHICA Street, Chandler AZ, 85225

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3 beds, 2 baths
Home size: 1,625 sq ft
Lot Size: 7,405 sq ft
Added: 12/14/17, Last Updated: 01/10/18
Property Type: Single Family
MLS Number: 5698667
Community: MONTEREY VISTA
Tract: MONTEREY VISTA
Status: Active


Great Value in the heart of Chandler close to freeways and Chandler Gilbert Community College! This 3 bedroom, 2 bathroom home is close to everything. Features include 2 car garage, vaulted ceilings, formal living- room and a family room. The kitchen has ample cabinet space and a breakfast bar. The master bedroom is located to the back of the home away from possible street noise and offers a full bath with double sink, separate tub & shower. Some repairs are needed, but this is the lowest price per sqft of all similar homes on the market.

Listed with Keller Williams Realty East Valley


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


$251,200 :: 2909 W CURRY Street, Chandler AZ, 85224

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4 beds, 2 baths
Home size: 1,932 sq ft
Lot Size: 8,276 sq ft
Added: 11/16/17, Last Updated: 12/21/17
Property Type: Single Family
MLS Number: 5688581
Community: CARRIAGE LANE 7 LOT 114-239 &a
Tract: CARRIAGE LANE 7 LOT 114-239 &a
The price of this listing was last reduced on 11/16/2017 by 5%
Status: Active


Great single story home in the heart of Chandler. Property features a greatlayout with 4 bedrooms, 2 baths and a large kitchen with breakfast bar. Nicesized backyard has an in ground pool. The property is in need of someTLC/updating but could 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/!


$430,000 :: 4397 S MARION Place, Chandler AZ, 85249

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4 beds, 3.5 baths
Home size: 3,925 sq ft
Lot Size: 12,632 sq ft
Added: 08/30/17, Last Updated: 12/06/17
Property Type: Single Family
MLS Number: 5653313
Community: SYMPHONY 2
Tract: SYMPHONY 2
Status: Active


This Home Has It All. Located In The Beautiful Gated Symphony 2 subdivision. Close to all amenities and top ranked Chandler schools This popular Hancock home offers 4bd/3.5ba/3cg with soaring ceilings. Huge kitchen for the gourmet cook in your life with custom tile counter tops and back splash. Master retreat has a 2 way fire place that sets the mood. Secondary bedrooms are very large with walk in closests. Downstairs Nanny's Suite/Guest Bedroom has it's own full bath. The professional expoxied 3 Car Garage with plenty of builtin cabinets for storage, work space and overhead lighting. Home Is Located On A Kid Friendly Street With A Private Park Not Too Far Away. Close to Award winning San Tan K-8 school. Alarm System conveys. Just Too Much To List. Don't wait.

Listed with Prime 220 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/!


$309,500 :: 1406 N SADDLE Street, Gilbert AZ, 85233

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5 beds, 2.5 baths
Home size: 2,647 sq ft
Lot Size: 6,098 sq ft
Added: 11/16/17, Last Updated: 02/16/18
Property Type: Single Family
MLS Number: 5688734
Community: STONEHENGE - GILBERT
Tract: STONEHENGE - GILBERT
The price of this listing was last reduced on 1/27/2018 by 0%
Status: Active


ALL OFFERS CONSIDERED. NEED TO BE UNDER CONTRACT BY 1/12/18!! Great home in friendly and prime Gilbert location. This Home has it all 16'Tile, High Vaulted Ceilings in living room and formal dining room. Big family room w/ built in fire place and an open floor plan. Kitchen is very open with large island perfect for entertaining. Home is very inviting with 5 spacious bedrooms. Large backyard and with a pebble tech pool. Backyard is perfect for family gatherings and barbecues. To add to this gorgeous home property is located near the us-60 freeway and is Walking Distance to Restaurants, Shopping & Movie Theaters. Not only is this home perfect for a growing family but property is priced to sell.

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/!


$615,000 :: 5380 S PEACHWOOD Drive, Gilbert AZ, 85298

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2 beds, 2.5 baths
Home size: 2,405 sq ft
Lot Size: 7,405 sq ft
Added: 02/11/18, Last Updated: 02/11/18
Property Type: Single Family
MLS Number: 5722230
Community: TRILOGY UNIT 8 PHASE B
Tract: TRILOGY UNIT 8 PHASE B
Status: Active


Elegant and upgrades Hermosa model located on the 5th fairway in the active adult community of Trilogy at Power Ranch. This home is luxurious and spectacular in every way. The entertainment kitchen has granite counter top, upgraded cabinets, stainless steel appliances, has a large breakfast bar with pendant lighting.Adjacent to the kitchen is a large sitting area that can be used as a dining area with wonderful views of the backyard and the golf course. The patio/backyard is a resort, private putting green/gas fireplace with setting area. There is a built-in barbeque that you can entertain in the summer with a misting system/fans and then in our winter you can turn on the heater. All of this along with everything done in flagstone. This home is a must see!

Listed with Coldwell Banker Residential Brokerage


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


$239,900 :: 4532 E Douglas Avenue, Gilbert AZ, 85234

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3 beds, 2 baths
Home size: 1,725 sq ft
Lot Size: 6,534 sq ft
Added: 02/09/18, Last Updated: 02/10/18
Property Type: Single Family
MLS Number: 5721773
Community: Towne Meadows
Tract: Towne Meadows
Status: Active


Location, location, location. Walking distance from high ranking Town Meadows elementary school, close proximity to Town Meadows HOA park. This corporate-owned property features wood blind shutters, fireplace in the family room, formal living room, master bedroom has separate exit to patio. Backyard has a lemon tree with tons of lemons. This is corporate owned property and sold as-is with no seller warranties or repairs. Buyer to verify whether on septic or sewer and other material facts as it is bank owned.

Listed with West USA 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/!


$254,900 :: 191 W SMOKE TREE Road, Gilbert AZ, 85233

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3 beds, 2 baths
Home size: 1,670 sq ft
Lot Size: 4,791 sq ft
Added: 01/31/18, Last Updated: 01/31/18
Property Type: Single Family
MLS Number: 5716733
Community: PARCEL 10 OF LAGO ESTANCIA
Tract: PARCEL 10 OF LAGO ESTANCIA
Status: Active


Charming 3 bedroom 2 bath home in great Gilbert location close to historic downtown Gilbert, restaurants and shopping and just minutes from the 60 and 202 freeway. Home features a formal living/dining room, bright open kitchen open to family room with french doors leading to the covered patio, master suite with private bath and walk in closet and so much more all within the beautiful Lago Estancia lake community. Buyer to verify any and all items that are of material issue.

Listed with Legion 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/!


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