Recently, REJO ran an article covering new incentives being offered by Fannie Mae to boost HomePath REO property sales. In the article, we described how Fannie Mae is offering selling agents a $1,200 bonus and buyers 3.5 percent of the final sales price to put toward closing costs when a HomePath house is sold. Our readers’ response was fairly tepid, for the most part, with most believing that Fannie Mae needed to discount HomePath properties more aggressively and loosen credit requirements in order for sales to result. There have been no reports, to date on the impact of the incentives on Fannie Mae sales.
However, when we spoke to a real estate broker in Michigan this last week, she brought up an issue with the Fannie Mae incentives that REJO had not previously considered: their total lack of relevance to one of the country’s hardest hit markets. Debbie Artripp is a broker for Cardinal Realty in Onaway, Michigan, a town of about a thousand people. “I cover eight counties – the northern tip of Michigan,” explains Debbie, adding that in rural areas like hers, agents tend to focus on geographic areas rather than specific cities or townships. During our conversation, Debbie noted the high levels of investor activity in the area, commenting that “investors are scarfing up the houses because they’re being sold for literally 40 cents or less on the dollar.”
But when I asked her if her business or the local real estate market in general might benefit from the new Fannie Mae incentives, she laughed. “They [the incentives] are useful – if you can find a house that qualifies,” she said. “We do not have the infrastructure or the political and government structures to say ‘these houses have to be up to code,’ and most of the properties available up here just don’t qualify.” And, she added, most of the sellers cannot afford to bring their properties up to standard. “We’re hit double hard,” she said. “Not only do we not have employment [since the auto industry left] but we have high unemployment. Not only are our houses substandard, but most don’t even qualify for section 8.”
Because rural areas have such unique real estate and, in today’s economy, owners have such severe financial limitations, many properties like this one probably would not qualify for Fannie Mae incentives even if the buyers were eligible.*
While we readily acknowledge that rural Michigan is a unique area of the country, it is by no means the only rural area affected by the real estate crisis. If the GSEs or other agencies are going to offer incentives, do you think that rural areas like northern Michigan should have options (or exemptions) that enable them to benefit and participate? Is it fair to exclude huge geographic and demographic regions of the country from these programs?
Thank you for reading REJournalOnline!
Watch for more startling insights from Debbie Artripp in future articles. You can learn more about Debbie and how she’s thrived in the real estate business in a tough area of the country for more than 20 years at www.soldbydebbie.com.
*Note: this is an example, not one of Debbie’s properties.
http://www.publicdomainpictures.net/view-image.php?image=175&picture=ugly-house&large=1
June 30th, 2011 at 1:30 PM
Remember the RTC and how they financed people with $500 down, as is , where is?
Problem solved!