I stand corrected; the preference is wider than owner occupants. Housing agencies and "designated partners" (usually non-profits) are also given the 15 day preference.

Thanks for posting again, Jim. Very interesting read!

Does this apply to Freddie Mac properties as well?

The complete press release for the FNMA information Adrian provided can be found here for any who are interested:

http://docs.Steven-Anthony.com/FNMA1stLook090109.pdf

-Steve

The Fannie Mae preference is for owner occupant buyers. Period. No income restrictions. No FTHB restrictions.

HUD repos also give owner occupants a head start on purchasing. Most new homebuilder used to have policies to not sell to non-owner occupants, but have had to weaken those policies to survive.

There are many city housing, county housing, federal and state programs that are targeted to help low income buyers, median income buyers and first time buyers in general. The list is too long to go into here.

One of the troubling things is those programs are weakly funded so that often a program only helps one or two actual owner occupant homebuyers. So rather than just a few FTHB programs to help thousands, there are hundreds of government programs and public private partnerships that help only few. This is because politicians get lauded for "doing something" as long as it does not get adequately funded (raising taxes)

And yes most (but not all) of the of the assistance that is available is targeted to low income communities and low income buyers,

Investors who wish to purchase with leverage (borrowed money) are lower in the pecking order when offers are considered because they pay higher interest rates than owner occupants, must put up at least 25-30% down, instead of 1/2% to 3.5% down.

Yes, you sniffed me out, I invest and represent investors as well as owner occupants. I sell to owner occupants about four fifths of the time. Investors about one fifth of my business. Telling the truth, I much prefer to represent owner occupant buyers than to represent other investors. Owner occupant buyers are generally much more reasonable to work with. They need a habitable home at a fair price. . Investors are looking for the one in a hundred killer deal that makes them a thick profit. When I start working with an owner occupant buyer, they usually buy within a few months. Investors can take many months or years before I get them into a deal.

Rather than create new laws to discriminate against legitimate declared investors, I do support stronger enforcement of anti-fraud laws against investors who falsely represent themselves as owner occupants, or violate other existing real estate or banking laws.

I encourage anyone who has evidence of fraud being committed by any market participant to report it to the appropriate regulatory authority. We need to enforce the laws we have, not create new barriers to honest economic activity.

Anna- You are the type of real estate agent that many of us are looking for based on your comments. It's easy to spot someone who truly cares. I think there are so many agents who have gotten so caught up in not only the buying game but the selling as well (investments), that they've lost sight of their original vision (I hope this was their vision) of truly helping people. I guess I'm also a little politically minded, thus my lobbying question. I just believe there needs to be more protection for FTHB's. I sincerely hope that what Adrian is talking about (in his comment below) is a ruling for all of us, not just the absolute bottom (though they truly do need our help as well).

Hi Sam... You are completely missing my point, and obviously haven't read all that I've shared on this thread. You said..".You and your agent are going to have to focus on some properties that are available, maybe sitting on the market for a while, and make a low offer. If the only thing in your price range is an underpriced REO, you're going to have to take a deep breath and get used to competing for homes."

This is NOT my situation as I can afford more than an underpriced REO. Thanks.

Adrian - I'm NOT low-income so would Fannie Mae even apply to me?? It seems like most of the protection is for the very poor or the very rich. I am the seemingly overlooked middle-classed individual. I hope I'm wrong, but that would be great news, if this applies to middle-classed potential buyers as well!

Mary Ann,

Fannie Mae has seen the light and has implemented the following.

Fannie Mae REO Properties

EFFECTIVE IMMEDIATELY:
During the first 15 days a property is on the MLS, only owner occupant offers will be considered by Fannie Mae. All properties must be listed on the MLS for a minimum of three days before an offer response will be given to an owner occupant offer. If the property has not sold during the first 15 days, investor offers may be entertained.

Mary Ann,
I absolutely empathize. My first time homebuyers that finally got their home? It was not an easy task. Many felt disheartened - beaten down. It was all I could do to try to keep their courage up - because it's worth it. And in the end - that's how they felt when they got their home. It's just the road traveled to get there was - as you say - fraught with heartache. But the heartache faded pretty quickly once you're got your feet up, relaxing after a hard day of work and look around at what you've accomplished.

Forget about government intervention. It's not going to happen, and it's a bad idea in general. Government regulations to hinder investors from buying homes would be the worst thing that could happen to the real estate market. First time buyers are already flooding the market with purchases.

You and your agent are going to have to focus on some properties that are available, maybe sitting on the market for a while, and make a low offer. If the only thing in your price range is an underpriced REO, you're going to have to take a deep breath and get used to competing for homes. The reality is, if the home is an amazing deal, lots of people would like to buy it. Just relax and stick to your agent's advice.

I appreciate your comment, Anna, but there just isn't much out there right now in Elk Grove in my price range (this is where I am currently living, and desire to continue to live). If there were more available homes, I would have offers all over the place. Also, I had a tough experience with a short sale recently; I would have to get my courage up to do it again as it was pretty heartbreaking.

I must say that I'm not going to give up hope that I'm going to be able to purchase my own home. I just believe that there needs to be more protection for first time home buyers. Perhaps more of a priority toward those of us who have never had the privilege of owning our own home for the FIRST time. I think many have forgotten what that feels like. Just my opinion, but I'm a visionary, so....

..hmmmm, I think I'm getting the "scent" of an investor over here... ;)

I am only speaking from my experience, Mr. Walker. I know that everyone is entitled to their opinion, but I believe that I have a very strong case. AND, I know that I'm not alone. There are tons of articles out there, regarding this issue from a first-time homebuyer perspective. Quite frankly, when it comes down to it, I could care less about an $8,000 tax credit. I just want a home. Period. I also just want a fair chance at buying a home, and until you've walked in my shoes, you will never understand.

P.S. A lot of these investors who do "fix up" the homes after they buy, raise the price so high that many of us would not be able to afford the home, anymore. I would prefer to have the option of fixing it up myself at my pace (if anything needs to be done to a home). That way, it is exactly how I would want it to be as it is going to be my home.

And don't totally discount short sales. I just listed one on a nice street off Folsom near Rancho Cordova.
There's only one lender and price is not too far off what's listed, so it should go quick. List price $175k.
4/2 off Tiffany West. I'm inputting listing now.

Mary Ann,
It is truly luck lately. You've got to have your offers out there - be quick about it. Maybe your agent happens to get along well with the listing agent and so list agent knows it will be problem free escrow. Many variables.

Investors tend to do multiple multiple bids on properties. They'll send out dozens of offers - lowball them - offer cash - and a few work out. But maybe that pending sale with an investor falls out - not uncommon. You (your agent also) need to track these properties. It is so fluid out there - you need to be ready at a moment's notice. You can succeed.....patience/persistence will eventually get you the home you want! And an aggressive realtor!

You already have preferential treatment with that $8,000 tax credit.

The cash buyers you speak of, are buying bulk portfolio's of dozens or hundreds of homes. Long before these homes would have hit the retail (MLS) market.

Most of them intend to flip after renovation, not rent the homes. So those houses will be back on market, soon, at retail market value,mostly with new paint and carpet etc. Probably sooner than if they had stayed with the bank.

The bulk buyers profit because they have construction crews, painters, landscapers and floor layers doing many jobs for them at cheap rates.

If you could figure a way to stop these bulk sales. it would be bad for the workers, bad for the economy and it would even be bad for you, Mary Ann, because you still would not have an opportunity to buy these "portfolio" homes for many months to come. And the banks aren't going to make them habitable in large numbers.

Are the cash investors whining that you first time homebuyers are getting an $8,000 federal tax credit subsidy that the cash investor does not get? No! they are counting on that to continue, so they can sell the renovated homes to fthb like you!

Are the renters some investors are providing housing for whining that they are not getting an $8,000 subsidy?
Yeah, they wish they could qualify to buy now while it is cheap to do so. But they are happy to get a clean renovated place to live, until they can.

Are existing homeowners whining that first time homebuyers get an $8,000 credit that is not available to a current homeowner? Some are. Everybody envies everyone else.

It is not just investors that are to blame for the tight market. It is mainly the banks and their asset managers, who are releasing the inventory slowly to halt the decline of property values. Their method is working. Prices have stopped falling.

No real estate agent in their right mind would lobby for policies that restart the freefall in home values.

Thanks, Steve. I had my heart ripped out over a short sale not too long ago, so I know exactly what your client is feeling. It is tempting as it doesn't seem like there aren't as many people to compete with when it comes to short sales, but it's also pretty volatile terrain (at least from my experience). I'll check out your blog regarding REO's. I guess my frustration is as a single income lady with a very good job, BUT still a single income, living in a somewhat expensive area, I would like to see more homes released. That's all. Simple request, but I guess it's a complicated issue when it comes to REO's.

... also, the reason I seem to only mention REO's as a potential buy for me is that the regular homes for sale (non-short sale as well as non-foreclosed) aren't even out there for sale at this time in my area (very few homes in my price range - under $200,000). I'm wondering what's going on?! I want to make the deadline for the $8,000.00 credit, but it doesn't look like I will make it, unless they extend it. Tough times, but I'm holding on to hope. I can't stop dreaming!

Hi Mary Ann,

I feel your pain, really. Just 5 hours ago I heard that the Short Sale my client has been waiting on for over 3 mos. was sold at auction from right under us.

I too have not heard of any FTHB lobbying effort. Regarding why properties that have reverted back to the Bank are not hitting the market is a much deeper question. I cover this topic in detail here:

"Coming to a neighborhood near you: REO Shadow Inventory"
http://www.trulia.com/blog/steve_ornellas_mba_re_mastersgri/…

Hang in there!

Best, Steve

(PART 2) I am someone with excellent credit (I've been pre-approved by three different banks, including Bank of America), yet I have experienced a lot of heartache in the past few months of being beat out by investors. Frankly speaking, many of us do see these investors as vultures, especially in my area as they are coming in from the Bay Area with a lot of money to buy up homes to rent out, not own. My real estate agent told me that there is a possibility of legislation that may be passed to help protect (yes, I'm using the "p" word again) us as first time homebuyers, but it may be a while. Thank you for your explanation, regarding the releasing of bank owned homes as I never thought of it that way. It is a tough market right now, and I'm still waiting for more homes to be released. I'm just tired of being beat out by cash offers that are lower than what I have offered to the seller. I know that there are many first-time homebuyers who are feeling my pain as I have had many discussions. Your support for us is deeply appreciated!

Mary Ann, you are right that there is a serious problem going on in Elk Grove right now regarding investors with cash beating out many offers that first-time homebuyers are placing. The issue is the inventory is low and the bank owned homes are being snatched up quickly. As far as lobbying legislation to have the banks release more inventory I have not heard that one yet, however I do now that we continue to hear that more will be released. Our manager has informed us that there will not be any huge release of bank owned as that would cause more damage to our economy as it will cause home prices to further depreciate. So the banks are trickling out their inventory. My suggestion as someone who has been feeling this pain as well with the buyer's I have, is to maybe consider looking into short sales. While they may take a little longer to close than bank owned properties you are still getting the pricing of REO properties. There are also many more of these properties to choose from and investors are not going to be going for these as much as the REO's. I have been lobbying legislation regarding extending the first-time homebuyer credit and if I hear of such a measurement to increase the amount of inventory being released I would definitely support that. Hang in there you will find a home!

"Protect" is an interesting word. While the vast majority of us fully work for and support first-time home buyers getting into a home, these investors are not bad people to be protected from. They're buying up the inventory on the market, a necessity for keeping the real estate market stable. First time buyers alone can't support the real estate market.

There is a huge inventory of homes in your area for sale. While some REOs are more difficult to purchase, there are many traditional homes for sale that a first time buyer can purchase at any time. If you're competing for a "steal" on a bank-owned home, you're going to be competing against some deep pockets. That's just the nature of a free market.