In an effort to boost HomePath REO property sales to owner occupants, Fannie Mae is offering selling agents a $1,200 bonus and the buyers 3.5 percent of the final sales price to put toward closing costs. The program is good for offers closing before October 31, 2011 and, as usual, investor sales do not qualify[1]. Ed Neill, Fannie Mae’s senior vice president for credit loss management, believes that the program will “encourage homebuyers who will make these properties their long-term home.” He hopes that the incentives will stabilize communities and help bring down the volume of REO properties currently held by the government-controlled GSE. In the first quarter of 2011 alone, Fannie Mae acquired 53,549 single-family REO properties via foreclosure.
The GSE will also include the option to apply for special “mortgage and renovation refinancing,” which officials hope will give homebuyers the opportunity to buy with essentially only 3 percent down[2]. Critics fear that this will simply lead to another bout of over-financed properties inhabited by homeowners who may not really be able to afford them, but Fannie Mae insists that ultimately moving the properties through the system is the important thing. Do you think that this new incentive program is a good one? Will it help the real estate market in the long run?
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[1] http://www.dsnews.com/articles/fannie-mae-extends-selling-agent-bonus-to-move-reo-properties-2011-06-14
[2] http://www.businessweek.com/ap/financialnews/D9NRQK780.htm
The average homebuyer does not have the skill set to do all that needs to be done to apply for and complete a fixer upper project without becoming extremely frustrated. The length of time it takes to do these loans simply keeps the inventories of foreclosed properties on the market longer.
The solution is to allow investors and contractors the opportunity to buy the property taking into account what it will cost to fix, put it back on the market in top condition and allow the market to dictate the ultimate price.
This will do five things immediately. Inventory will be reduced. Jobs for construction & remodel labor will increase. Sales for construction materials at places like Home Depot & Lowes will increase. The neighborhood will be improved by having inventory of improved property for sale. And lastly, a qualfied investor with a substantionally greater downpayment has taken the property off the books of a bank or FNMA/Freddie.
This program will only work if Fannie Mae will sell those properties at a discount. They are talking about selling properties that need work under this program and that could turn into a disaster. Anytime you try to finance properties that need work into owner occupied sales, you are asking for trouble. The gov’t should just put the houses that need work on the market and sell them for the highest price they can get. The gov’t needs to stop trying to make the market, buyers, investors and sellers will decide what they want to pay for a property and once they own it, they will let the market decide what they can sell it for.
I believe the program will work with flying colors, if they would give the consumers who have adequate income, but can qualify because of the tight demand of a high credit score. If the score were not as they are now, the houses would snapped up so fast by these people, you would not be able to move them fast enough. I know, because I am one of them, job qualification is there, income is there, have credit just is not high enough to afford to buy a home. I am a first time homebuyer, with no credit cards, no past due obligations. This is where both buyer and seller will win. And I for one, will be a very happy home owner, if this could be. But that’s just my opinion, my 2 Cents worth. Something to think about? Roll back the credit score. Let the ones that are qualified, not just by a number, but by honest job, good pay, a desire to want and keep a home. That is still the American dream.. is it not?
correction” I believe the program will work with flying colors, if they would give consumers who have adequate income, but (can’t) qualify because of the the tight demand of high credit score