Home Buying in Grants Pass>Question Details

Sharon Vest, Real Estate Pro in 97526

I just had my first enounter with the owner occupant certification rider to the real estate pruchase addendum for Fannie Mae foreclosures which

Asked by Sharon Vest, 97526 Sat Jun 26, 2010

prohibits investors offers being considered during the first 15 days of the home being listed on Homepath.com. it is known as the Fannie Mae First Look Policy. It seems a little discriminatory to me as I wanted to offer on a new listing in order to have a place for my daughter and her family to live, not the typical investor. She cannot qualify to purchase so we thought we would find a great deal for her now and later down the road make it easier for her to purchase her first home. So, we are penalized because we won't be living with our daughter!

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Ok, first and foremost, fannie mae has the power to restrict purchases to owner-occupiers, because investors in the one to four unit real estate market can enhance their profits by using fannie mae artificially low financing. Intuitively, that is not fair; we all see that. Should tax payer's money go to enhance investor's results? The legal rule on violations of the fifth amendment like this are that they're allowed as long as the benefit to the community is substantially justifies the violation. Making sure tax funds go to get first time home buyers into their first homes, and not fortify the investment portfolios of wealthy real estate investors, gives Fannie the power to so stipulate owner occupancy forms be signed.

The problem in this, as it usually is, the introduction of varying forms of corruption. I recently had to sign the owner occupancy form even when I was paying CASH!!! The reality is that REO asset bank managers have inherited the supervisory role over the "ratio" of fannie mae assets (one to four, regardless of how they're financed, to home owners v. investors), and report those ratios to the fannie mae authorities. Just give this situation a little thought: The original intent was to protect tax payers and home owners. Now, as the price of one to four unit income properties drop well below replacement value, and as investors buy them up with CASH, involving no public funding whatever, because many of those REOs are being sold by banks regulated by fannie mae, these arbitrary ratios are still being maintained, even when there's no fannie mae financing. Did someone say the banking industry regulations need a little work?

The bottom line, is that until the legal system fixes this problem, you are liable for the ten thousand liquidated damages. I am not a licensed attorney (yet, I will sit for the bar next year) so I can't go into court and argue for you, but if this were to occur to me, I'd go into court and argue for me. Courts are sympathetic to preventing the use of liquidated damages for punitive purposes. So the argument is ripe to be made. Again, I'm not (yet) licensed to do this for you, but I can do it for me.

I am a licensed broker, and if I can help you with any real estate matters please feel free to call me. Thanks
Web Reference: http://www.lanerealty.net
0 votes Thank Flag Link Mon May 16, 2011
HUD does the same thing. This is not to keep investors from snapping up cheap properties, this is not to promote home ownership or neighborhood stabilization. This isn't even about making profits for Fannie Mae investors.

I was recently told that FNMA and HUD were selling off homes to insiders. I didn't believe it and I'm not a conspiracy theory kind of person, but I do advertise Homepath and HUD properties as my local rules allow it. I have noticed that about 1 in 10 homes listed from government entities generally come off the market without there ever being a sale noted in the MLS or on the government website. However, when you check the grantor/grantee index a few weeks later you can see a transfer of title. Usually to an LLC with the same name as the property address.

I don't fully understand it and I'm not quite sure what’s going on, but it smells fishy to me.

J.R. Thrasher
1 vote Thank Flag Link Thu Sep 26, 2013
This actually should be relatively straightforward. If your daughter can't qualify for a mortgage at all, you can take the mortgage out and put the title in both your name and the name of your daughter. The "owner" of a property is based on who is listed on the title...not who is responsible for the mortgage. Perhaps that would allow your daughter to qualify for the owner occupant requirement, while allowing you to take full responsibility for the mortgage.
1 vote Thank Flag Link Fri Sep 13, 2013
Unfortunately, more rules are in place to disallow this solution. When purchasing a Fannie Mae or Freddie Mac home, the names on the deed, loan, and contract must all match exactly. If the lender can't put the daughter on the loan, her name can't go on the contract or deed.
Flag Tue Jun 24, 2014
I know it sounds discriminatory but it is to protect these foreclosures from being snapped up right away by investors that are looking for that cheap rental they want. Fannie Mae focuses on getting those foreclosures into the hands of people that intend to have it as their primary residence and this includes a lot of first time home buyers at this time. If you go onto http://www.homepath.com, you can see the status of the first look period and find out how much time is left on the first look. Then, as soon as you see it is available for "investors" have your agent put your offer in. If you don't want to deal with this, have your agent find some foreclosures that aren't Fannie Mae, there are plenty of Bank owned homes aavialable that are not Fannie's.
1 vote Thank Flag Link Mon Mar 19, 2012
Good Morning Sharon,

Fannie Mae and HUD and VA all have programs in place to make their foreclosure offerings more attractive to home owners rather than investors. Their purpose is to keep that housing in the owner occupied market. I'm hoping for your sake that the property remains available to you after the inital 15 day owner occupant offering as I think it is incredibly thoughtful of you to set in motion a series of events that will make it possible for your daughter to step into the real estate market as soon as she is able!
1 vote Thank Flag Link Sun Jun 27, 2010
I bet you think investors should get the 15 day first look and a 15% discount on top of it get me a break.
0 votes Thank Flag Link Thu Sep 19, 2013
Yes I am familiar with this First Look Program from Fannie May I actually had a hand in selling a property in Ocala last month that had this addendum attached to it, the programs parameters are set up as such that if you resell the property within a timeframe you can be penalized. After 15 days the addendum no longer needs to be attached to the property, if you need further clarification of how to proceed with purchasing a First Look or any type of property please call me for a consult.
0 votes Thank Flag Link Sat Sep 14, 2013
Its perfectly simple: Fannie Mae's innovative First Look marketing period was created to promote homeownership and contribute to neighborhood stabilization — allowing homebuyers to bid and purchase foreclosed properties before they are made available to investors. from the website of Fannie Mae
Maryanne Moody, Realtor
0 votes Thank Flag Link Sun Jun 2, 2013
Help your daughter by cosigning or gifting her the funds to purchase. Why would you make a purchase in the style of an investor if you are not thinking of eventually using it as rental property?
0 votes Thank Flag Link Sun Mar 31, 2013
How does this "certified owner occupancy certificate" affect a cash purchase? It says that the buyer will live there for at least a year before disposing of it or renting it out. I have a buyer who did a short sale a little over a year ago. A family friend wants to pay cash for the property and rent it to him until in two years he can qualify for a mortgage.

It would seem to me once I own a property free and clear there should be no strings attached. Am I living in the United States ????
0 votes Thank Flag Link Sun Aug 12, 2012
Put your daughter's name in the offer also, that way she can take advantage of the owner occupancy requirements.
0 votes Thank Flag Link Sat Mar 24, 2012
According to a socialist government a person buying and occupying a property and realizing government subsidized capital gains, government subsidized tax relief, et al is not an investor!

Government family rule says that a person's relationship with government is far more important than that person's relationship with their family (e.g. Sharon Vest's relationship with her daughter). This socialism 101 and is by design meant to be anti-family.
0 votes Thank Flag Link Thu Mar 15, 2012
I just spoke with a remarkably sweet lady who has been in this line of business for 15 years. Uncle Sam recognizes only 2 kinds of purchasers: 1. owner-occupants :-) , and 2. investors :~( . Other respondents have discussed what #1 is. As a practical matter, #2 includes everyone else -- including parents buying for kids, retirement homes, vacation homes, etc.

So, because: 1. Uncle Sam hates it when people make a profit, 2. owner-occupants are lined up to buy foreclosed houses, 'cuz they're always in such great shape, and, besides, homeowners have lots of money to fix up any small stuff, and 3. Uncle Same likes to pound square pegs into round holes and wants to treat evil capitalists the same as folks contemplating retirement, then -- all the generous parents, vacationeers and imminent retirees out there get treated like evil investors, and their money is no good for 15 days.

0 votes Thank Flag Link Mon Sep 26, 2011
It is a very frustrating situation and I understand the "reasoning", just don't see that it helps anyone much. Many investors will take a chance and falsify information to get their offer in early on. I am more ethical than that and I would not want that to be tarnished. I still think there should be some qualifying circumstances for cases where the purchase is to provide a home for a family member. We did find a home for our daughter but it was not in the area we wanted and we had been through over a year of trying and even going the short sale route before we settled for something just so we could get her and our grandchild out of a mold infested rental.
0 votes Thank Flag Link Wed Mar 16, 2011
I ran into this issue recently as well and it is VERY frustrating as an investor. The homes in my area are all getting scooped up prior to the 15 day way period and Im not certain they are all owner occupants. Im not sure if some investors are taking a 10k risk but it doesnt seem worth it to me. Also I have noticed alot of "reo flippers" in my area which is also frustrating. It is one thing for an agent to buy a property, close on it, rehab it and resell it for profit but what these "reo flippers" are doing seems to be very grey. Basically they are posting bandit signs all over town the day an reo hits the market. For example, new reo listing 45k, they will place a bandit sign for 55-65k on the same listing and do a double closing with the seller only seeing owner occupant purchase. Not sure how this is legal as a licensed agent but it is happening. Im an investor myself and am very frustrated at this 15 day rule when you see the house finally close as a CASH transaction. Im sorry but MOST owner occupants don't pay 75k cash, 100k cash....ect. The investors are taking chances and finding ways around this rule I am convinced but I am not taking this chance. Good luck with everything.
0 votes Thank Flag Link Wed Mar 16, 2011
Sharon how were you penalized? You were purchasing the property as a NOO. I had clients buying to have a place for the wifes brother. They would qualify for a 55+ community but he was 51 and they could not "rent" to him. In another community they were at the maximum according to their by-laws for NOO properties and we could not buy there. We looked until we found a move in ready property that was lender owned and priced 25% below anything else in the community. They were so happy that they did not get the other 2 that they were serious about. 1800 sqft ranch condo 3/2 with a 2 car attached garage in a pool community for 97,000.00! Good things happen to people that are patient.
0 votes Thank Flag Link Sun Jun 27, 2010
You were not penalized. You were simply asked to live by the rules.

You may not like the rules, but they are there for a reason. The reason is to allow individuals to buy a house to live in without speculators buying everything before others could get a chance to bid.
0 votes Thank Flag Link Sat Jun 26, 2010
I understand Sharon. A friend of mine also ran into that. Wanted to buy 2 homes on one lot for the same type of purpose and lost out because she was called an investor also. It seems discriminatory to me also.
0 votes Thank Flag Link Sat Jun 26, 2010
It is cases like this where the system does not work. You did it the fair and legal way where most people arenot filling out the forms that way to bypass the system. I wish you luck in finding a place for your daughter.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Jun 26, 2010
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