Fannie, Freddie Offer Special Incentives
Helping Buyers Compete with Cash Investors
Non-investor shoppers of homes now have an extended period to submit offers on some listings without having to compete with deep-pocket investors, thanks to Fannie Mae and Freddie Mac and their goals to promote stable neighborhoods and protect values.
Under a program called First Look™, owner-occupants, some nonprofits, plus public entities and their partners have an exclusive 20-day period to bid on and buy designated listings on HomePath.com. During the same 20-day period, investors may not submit bids. (In Nevada, the exclusive-right-to-bid period is 30 days.)
In announcing the extended period (up from 15 days) Fannie Mae officials said First Look is designed to promote owner occupancy, contribute to neighborhood stabilization, and reduce taxpayer losses.
The program is expected to help first-time buyers who have mortgage contingencies. In searching for affordably priced homes, these would-be owners often find themselves at a disadvantage compared to investors with all-cash offers and no contingencies.
Housing data firm RealtyTrac reported more than four of every 10 residential sales in November (42 percent) nationwide were to buyers who paid cash.
Fannie's inventory of HomePath listings totals around 35,000 properties while HomeSteps®, a similar program from Freddie Mac's real estate unit, encompasses approximately 13,000 active listings. In Washington state, the HomePath database has around 1,900 listings. Properties with the First Look period include a countdown clock that displays the number of days remaining for negotiation.
Both databases are searchable, and both companies offer attractive terms on some properties. For example, Fannie's financing deals start at 5 percent down with no mortgage insurance or appraisal costs.
To qualify for purchasing HomePath properties, non-investor buyers must commit to make the home their principal residence for a least one year. Eligible purchases may submit offers through participating real-estate brokerages.
If Fannie or Freddie receives acceptable offers from owner-occupant bidders, they will sign contracts to sell without seeing any competing bids from investors. Chris Bowden, Freddie Mac's senior vice president for HomeSteps, said the extra time for exclusive bidding could be "especially important for buyers in markets where home inventories are shrinking."