It could be said that over the past few years the housing market in the United States has hit a bit of a rough patch. Home prices are down, sales numbers have dipped, construction has, for the most part, stagnated, and there is fear of a double-dip crisis. If all that were not enough, it seems that the part of the market that is actually rising is the number of foreclosure properties. It is this last point that has been the subject of federal investigations, programs aimed at encouraging the modification of loan terms in order to keep homes out of foreclosure, and closer scrutiny and examination of the foreclosure process.
The ever mounting number of homes in foreclosure hurts the individual homeowners, the communities in which they live, and the larger market. In addition, lenders are also seeing more and more foreclosed properties on their books-properties they are unable to sell. The strain is being felt all throughout the industry. This strain is shared by Fannie Mae, which has added 53,949 foreclosures in the first quarter [of 2011]. In an effort to clear some of these properties from its books, Fannie Mae has added new incentives to its HomePath® program. This program was started in 2009 to aid in the purchase of Real Estate Owned (REO) properties (properties owned by lenders due to foreclosure or other previous owner distress).
Effective June 14, 2011 to October 31, 2011, the selling agent that represents an owner-occupant borrower will be eligible for a $1,200 bonus, if it is requested in the initial offer. This comes in addition to the incentive of 3.5% of the final purchase price being applied to the borrower’s closing costs. It is important to note that in order to qualify for these incentives, the buyer must be an owner-occupant. These incentives are not available on investment properties.
In addition to the monetary incentives, the HomePath® program also offers potential owner-occupant buyers an opportunity to submit offers on properties before investors through the First LookTM marketing period. There is a 15-day period (30 days in the state of Nevada) where no investor offers can be submitted. After the 15-day period, both investor and owner-occupant buyer offers will be considered.
Some industry professionals have voiced concern that by limiting the window that investors may submit offers and not granting the same types of incentives, Fannie Mae could further stall the sale of foreclosures and stifle a growth opportunity that investors may provide.
Either way, this is an additional step to try and curb any further crisis. It remains to be seen if similar incentives will be offered to investors in the future.