Buying a Bargain House by Hotline

ONE WAY to find affordable housing is to phone the hotline 800 553 4636. On the other end will be Fannie Mae, the mortgage purchaser that would like to sell you a repossessed house at an attractive price. If there are residences available in your state of choice, you will receive a list of the properties in the mail, their location and the name of a local agent.

Following electronic commands, you punch the zip code of your chosen area, then the desired number of bedrooms and baths. If such homes are to be had, you listen to a list of houses identified by address, list price and square footage.

A hotline is just one innovation that both private and government agencies are using to sell the many single family homes that are foreclosed each year. In 1988, these agencies repossessed at least 155,000 houses and condos. Owning such properties is not the business mortgage institutions want to be in and that is good news for prospective buyers. You can be sure they will give you the best deal in town.

With a view to that deal, Freddie Mac, another mortgage buyer, recently launched a First Home program in Houston with below market interest rates. It is geared to helping borrowers get a mortgage with little or no down payment. First Home even can arrange a lease to purchase plan for people unable to qualify immediately for a mortgage. Of the 203 houses put up for sale, 133 were sold on the first try at prices from $27,000 to $97,000. Although real estate is turning up in Houston, the highest figure bought a decidedly upscale home.

Wherever the location, prices of foreclosed houses fall in a broad range, and there are a good number like the top selling home in Houston. Many are in the medium range for the area, while others are obviously in distress. For a real bargain, consider the handyman's special, the diamond in the rough that can be brought to brilliance with your own time and energy and money as it comes. Every mortgage institution has some of these to sell. Fannie Mae prides itself on installing new fixtures and carpeting along with painting and replacing appliances, Freddie Mac also refurbishes. But the Federal Housing Administration, Department of Veterans Affairs, and Federal Deposit Insurance Corporation all sell a house pretty much as is. These agencies are not funded for many improvements.

Hotlines and special programs aside, sale procedures are standard. You can easily spot ads in newspapers placed by real estate brokers as well as agencies holding properties. Repossessed houses are sold through local brokers at fair market prices. Agencies also take scaled bids the method used in the First Home program from any number of hopefuls who submit a price at a predetermined time and place. Highest bids win. If houses languish on the market, agencies may accept lower than list prices, and they occasionally hold formal auctions.

A word of warning about auctions: It is vital that you inspect the property with the utmost care, ideally in the company of an appraiser. If possible, talk to a real estate broker familiar with the property. And make sure you understand not only the bidding itself but also what closing costs would amount to. The latter can be a shock.

The financing of a foreclosed home is much like that of any other. You can get guidance for your source of mortgage from the agency 4 or a broker. In mid 1989, the Federal Savings and Loan Insurance Corporation is offering to finance mortgages with 15% to 20% down in some areas, notably the depressed Energy Belt states like Texas and Oklahoma, where lenders are skittish. The Department of Veterans Affairs does even better. It will provide 100% financing, and you needn't be a veteran to qualify. just reduce the VA's foreclosed houses by one.

Both the Federal Housing Administration and Department of Veterans Affairs are prepared to give individual assistance to potential homebuyers at their regional offices throughout the country.