Fannie Mae Limiting Access to Cheap Housing
As prices of homes rise Fannie Mae is selling more of its foreclosed properties to investors, thus, limiting homebuyers’ access to cheap housing.
When a loan owned by Fannie Mae defaults the mortgage company then acquires and sells the property. But there seems to be a decrease (from 59% in 2010 to 55% last year) in selling to individuals, non-profits and local governments. Because homebuyers are retreating from this market due to increased prices, investors looking to rent or flip are buying a greater share of the housing from the government-owned mortgage giant.
Fannie and Freddie First-Look Program
Fannie Mae and Freddie Mac (which has a smaller number of foreclosures) have extended their first-look programs, which place homeowners at the front of the line to buy the houses, in an attempt to fill more of their properties with owner-occupants. In this program offers from investors can be submitted but only bids from owner-occupants, some non-profits and public entities are considered during the first 20 days that a property is listed for sale.
Homes are Still Overpriced
Since Fannie Mae and Freddie Mac always aim to get the highest property price possible, they often are listed at or above the market value – thus making it harder for the owner-occupants to even get a home during their exclusive first look.
“The first-look program almost becomes moot because the homes are priced too high right out of the gate,” said real estate broker Gail Buck. “By the time the property gets reduced to what it’s worth, now you are past the first-look program and owner-occupants are competing with investors.”
Federal Regulators Feel Fannie and Freddie Are Not Doing Enough
According to a group of advocacy organization Fannie Mae and Freddie Mac are not doing enough to help American families get these real estate owned homes. But according to Freddie Mac spokesman, Brad German, “A strong emphasis on selling to owner-occupants is consistent with Freddie Mac’s mission to foster homeownership opportunities and will help stabilize communities and local home prices.
For information and guidance on foreclosure, you need the experts at Resnik Hayes Moradi LLP.
Source: Bloomberg, Fannie Mae Selling to Investors Backpedals on Homebuyers, April 10, 2014