Following the lead of Fannie Mae, Freddie Mac is expanding its "First Look" program to give buyers who are looking for a home to live in, rather than flip, an opportunity to buy without competition from investors.
Fannie Mae rolled out its "First Look" program nationwide last November, saying it would accept offers only from buyers who intend to be owner-occupants or those using public funds during the first 15 days a Fannie Mae property is on the market. Offers from investors are considered only after the first 15 days have passed.
Federal housing officials liked the idea so much they have convinced other lenders, representing about 75 percent of the real estate owned (REO) marketplace, to participate in a National First Look Program announced this month.
That program gives nonprofit organizations and state and local governments participating in the Department of Housing and Urban Development’s Neighborhood Stabilization Program right of first refusal to purchase foreclosed homes in certain targeted neighborhoods.
Participating institutions include Bank of America, Chase, Citi, Deutsche Bank, GMAC, Nationstar Mortgage, Ocwen Financial Corporation, Saxon Mortgage Services, U.S. Bank, Wells Fargo, Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).
Freddie Mac today said that beginning Friday, it will expand its own First Look initiative to allow any homebuyer who intends to buy an REO property from Freddie Mac as their primary residence a 15-day window to bid on properties before they are offered to investors.
In Nevada, the Freddie Mac First Look Initiative offers buyers who plan to become owner-occupants a 30 day window to shop without investor competition.
In its most recent quarterly report to investors, Freddie Mac reported 62,178 homes in its REO inventory at the end of June, up from 34,699 at the same point in 2009, and noted that "our REO property inventory will likely continue to grow."
Fannie Mae reported starting the year with 86,155 REO homes, and the company said it sold 87,612 properties in the first half of the year. But Fannie acquired 130,767 properties through foreclosure during that time, leaving it with an REO inventory of 129,310 single-family homes valued at $13 billion at the end of June.
Fannie Mae said it’s unable to market an increasing percentage of properties it has repossessed, either because they are in need of repair, still occupied, or located in states where they can still be redeemed for a time by their former owners.
About 36 percent of the properties Fannie Mae was unable to market were occupied, with occupants facing eviction, and an equal number were still in their redemption period, which lengthens the time a property is in REO inventory by four to six months, the company said.