Fannie Mae Gives Homebuyers First Shot at Foreclosures

Many potential homebuyers are intrigued by the potential savings to be had in buying foreclosed property. Unfortunately for them, well-funded and market-savvy investors typically swoop in and snap up the plum offerings before the average homebuyer even knows they’re on the market.

Now Fannie Mae is giving average homebuyers a shot at those foreclosure bargains, through a program called “First Look.” The program limits offers on Fannie Mae foreclosed properties to potential owner-occupants and public-fund buyers for the first 15 days the property is on the market, meaning they get first shot ahead of the investors.
 
With some 72,000 foreclosed properties on its books, Fannie Mae has a substantial inventory of “real estate owned” (REO) homes, as they’re known in the industry, to choose from. As a government-supported enterprise that guarantees home mortgages, it and sibling agency Freddie Mac have become two of the nation’s biggest owners of foreclosed homes in the collapse of the housing market.
 

Buyer-friendly options

 
The First Look program also offers owner-occupant buyers a number of other advantages over a typical REO purchase. First, you can hold a property with a deposit of as little as $500 down. Second, you can not only have the property appraised before finalizing the purchase, you can renegotiate your original offer after the appraisal! Finally, you have up to 45 days after your offer is accepted to close on the property – 15 days longer than with other Fannie Mae owned properties.
 
Fannie Mae launched the First Look program in August in selected areas and more recently has been expanding it to other parts of the country.
 

Another way to buy

 
Homebuyers can also take advantage of the First Look program in another way other than buying a foreclosed home directly. Agencies using public funds can also purchase REOs under the program, and often fix up foreclosed properties before offering them to low- and moderate-income buyers. Homebuyers purchasing homes this way can often take advantage of state and federal buyer-assistance programs that can provide funds toward closing costs, a down payment or other homebuying needs. State housing agencies are usually the first place to check for information on such programs.
 
The program is intended to not only help Fannie Mae clear out its stock of foreclosed homes, but also to help stabilize neighborhoods affected by foreclosures and promote home purchases by owner-occupants. Freddie Mac has its own program for selling foreclosed properties to owner-occupants called HomeSteps, which can provide up to 3.5 percent of the home purchase price toward closing costs, along with a two-year warranty on the home.  
 
Listings of available properties can be found on the Fannie Mae web site at www.fanniemae.com, or on the Freddie Mac HomeSteps site at www.homesteps.com. Additional information can be found on those sites or by contacting a local realtor who works with Fannie Mae and Freddie Mac foreclosures.
 
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