Fannie Mae’s First Look initiative, a program that is designed to bypass non-owner occupants (read: investors) to bring owner-occupants and public entities together with REO properties, has undergone a tuneup to make it more effective. Julia Dugger, Fannie Mae’s senior manager of marketing communications, says that while the program has been successful, execution has been tricky largely because generally MLS listings, where the First Look REO properties have been advertised, are not available for viewing for the parties that the program is targeting.
To address this, First Look properties will now be listed on HomePath.com rather than MLS and will be identified by the First Look logo, which indicates that the home is in the “first look” marketing period, which lasts 15 days.
The First Look program is designed to put owner-occupants in homes instead of making those properties available to investors for purchase. For the first 15 days of Fannie Mae REO listings, only offers from owner-occupants and public entities are considered. If the house sells in that time period, then it will go to one of these types of parties rather than to an investor. Fannie Mae says that these buyers are preferable because they bring “permanency and stability to tenuous markets where swollen inventories of foreclosures have taken their toll.” However, as usual, I think that everyone might be better served by letting the market work. After all, if an investor can make a higher offer and meet financing terms, then Fannie Mae would recoup more of its losses and still have a new owner who has a vested interest in keeping that property inhabited and intact.
I’d like to hear about your experiences, if any, with the First Look program. Have you found it to be a help, a hindrance, or a non-issue? Thank you for reading the Bryan Ellis Real Estate Letter – your comments and questions are welcomed and encouraged!
Bryan,
More of your right wing propaganda. FHA has for years always required a grace period for owner occupants before allowing investors to bid on HUD homes. There’s nothing so horrible about this. it gives future homeowners a chance to buy the property at a lower price and gain some equity. In 15 days, we investors will have our chance. I have always still made a very good profit on HUD homes although I had to wait to get the property.
I have been locked out of buying some of these properties because of the 15 day rule. One of these properties had termites, drywall missing and a leaky roof, but I was still not allowed to make an offer. I doubt a first time home buyer would want this property.
The inability of government bureaucrats to recognize the need for investors is truly amazing.
I estimate 10-30% of foreclosure properties would not exist if all government backed loans were returned to “non-qualifying assumable” status like they were in the 60′s-80′s. FHA and VA defaults were practically non-existent as anyone (including investors) could assume any of these loans.
The 86 tax laws and all the changes made since then to punish investors have led us to the situation today.
Those idiots running Fannie & Freddie are doing exactly the opposite of what needs to be done to clear up this mess.
All these laws trying to promote individual home ownership to the detriment of the normal market have brought us to the point where we are today-10 million families are losing their homes mostly from bank and government manipulation of the normal market.
While it is true we have always had to wait the 15 days, I like bidding on the left overs. You can work with a sharp realtor trained to watch for good deals we want at the right price points. Then you bid and get the results over night. I have bought nearly 100 HUD properties this way with great success knowing the value to acquire and then the value to re-market for a good profit. Thx for the article Bryan. Keep it coming. MJ
The real key parts that is being missed here are two things; “For the first 15 days of Fannie Mae REO listings, only offers from owner-occupants and public entities are considered.” The important part is the “public entities”, think about what this means to the ones paying taxes. Once it is in a non-taxed role, owned by a public entity, the taxpaying public, a shrinking class of people, have to come up with ever higher amounts to support the nonpaying part of society.
The second key part is bad (but they really deserve it in my opinion), is the elimination fo MLS for the intitial listings. MLS has worked at screwing people almost as much as the government on the issue of real estate over the last several years and while this will hurt some of their sweet “pocket” deals in some ways this will be better for the average person. The giant drawback is it is one more part of private enterprise being taken away from our society and placed into the cronism of a few government people to do with as they desire.
So yes, this is one more hinderance to the real estate market hitting some kind of parity and even more fingers are going to be in the pie before this settles out, which it is not even close to doing yet. Look at Europe and Greece if you want a taste of what may be next.
No problem with 15-day rule: inventory is H-U-G-E
No problem with MLS access: work thru an investor-friendly agent
No problem getting new props: offer 40% and get what you can
No problem in acquisitions: buy with CA$H, Close FAST
.
Although we do not buy bulk, we are buying massively great deals and turning them through lease w/Options for credit-improvable potential homewners
I have NO PROBLEM with allowing Owner-occupants first look. But some of these deals most investors NEVER get a chance to get fair bid. The favored listing brokers have all the control.
I have had local HUD and VA brokers “SHOP” my offers (Listings seem to funnel regionally through specific favored brokers) to all their local “crony” (investors). The end sales price (conveniently sold by the listing broker) is often the same or only slightly higher than my own solicited “highest and best” offer.
Some of these favored “handlers” of government listings LOVE to make their FULL commission (selling their own listings) rather than share with the hard-working buyers agents on the ground who bring in all the “justifying” low offers justifying their own “pocket” buyer’s final bid as the best out there (certainly informed of the most current “highest and best” by the official listing handler. What’s to stop them except “honor”)
Should these official HUD/VA/FHA brokers have that much control?
Can they(fannie mae) accept an offer after 2 days if they want to ? or 3 days? or does fnma have to wait till all 15 days are up. ??and then accept the best offer?.thats what HUD does for the first 10 days a property is listed. the first ;look program is not very clearly explained.
Duh, good question and imagine that a government program is not very well explained!
Ever wonder why they make a point of not explaining things very well? Here is a hint, they cannot be held responsible nor can they be told they have to do something. It really goes to them being able to do as they want with no responsiblity on the government’s part for what ever they are doing. Watch the riots in Greece to see what is next in Europe and ask yourself, why are we paying for this and how is going to effect the real estate market soon? Why the rush for all of these “new” programs that are hard to understand how they are working or who is in charge? Why no talk about Fannie and Freddie and how their policies had more to do with the collapse of our economy at this time than any of the red herrings Congress wants to keep talking about?
I see an opprotunity to make money here but quickly, quickly!
Bryan:I need to say Thank You & sincerely be appreciative for allowing this blog. I’m a RE investor focused on solving RE problems.
Your question is legitimate & to that I can say: anything that comes from any bureaucracy that knows nothing about RE is bound to have issues. Fannie Mae is just that…another bureaucracy! Same goes for the majority of RE agents, brokers who even after so many years within the Industry know almost nothing about it! Their concern as we all know is that commission check from beginning to end. They also work favorably with whoever open up their doors to get the listings. They become “Puppies” within the bureaucracy & often times with little concern for either investors or 1st time buyers.
Why then wonder there are problems? Every thing is obvious but we need to rehash it day after day hoping some day it will change. Fat chance! We investors need to get real & start concerning with how to solve the problems proactively rather than whining so much about irrelevancies.
I must remind every one that Greece has nothing to do with what will happen here & with the RE outcomes. Why not whine about the politicians you people named & voted for & whom destroyed the National & International economies. Why not admit that they have been corrupted by greed & their incapacity to be transparent or even their capacity to hold office?
My apologies here for getting off the tangent. I simply need to make a point in advising to all & every one to limit their Political concerns to themselves. You Bryan asked a simple question & a simple answer should be transmitted. Not one of those who spoke about Greece have ever visited such a great Country & such a wonderful people. Chances are they don’t even know its map location. In sum Fannie Mae is looking up for its own interests as much as all RE agents working for them. We Investors need to get together, I mean together & create ways to improve our tactics & conquer those bureaucracies.
Quit whining… become proactive & learn to be Real!!
Stop the hate promotions & post your “professional” comments as required not your political deviance’s
Thanks to those who posted a few constructive professional comments..
Thanks for your comments. I don’t have any objection to political commentary, whether in support of or opposition to the positions that I hold. However, I do ask that the comments be focused on the topic of the post where the comment is being made. This is, after all, a real estate blog. — Bryan Ellis
I have found that many of these foreclosures are sold to unsuspecting home buyers (at inflated prices) who have no idea how much work many of these properties need, and, as a result they grossly underestimate the cost of the repairs. I have seen it over and over where a property I evaluated for an investment needs $40K+ in rehab and an owner occupant buyer offers as much as $40-$50K below retail value (i.e. they have not gained any real equity after renovating the property).