New Foreclosure Rules
Here is an interesting new policy change coming from
Fannie and Freddie. If you have
been trying to buy a foreclosure home recently, you have probably been just as
frustrated as I am.
When they first hit the market, most foreclosure homes are
listed about 10%-15% under “market price”. This is mainly to make sure the asset does not sit on the
market a long time and lose even more money, but also in some part because a
foreclosure buyer is taking some level of risk since the seller is not
testifying to the property condition and reports are non-existent.
The low price has attracted a lot of investors, who in
many cases are buying with all-cash, or first time buyers. Of course, the all-cash investor has a
strong offer through a quick close and no appraisal; this puts the first-time
buyer at a big disadvantage and what we’ve seen in the market is a “feeding
frenzy” where investors are blocking normal buyers out of the market
So to help make situation more fair, the latest announcement
from Fannie/Freddie is that they will force a 15-day waiting period before
hearing any investor offers so normal owner-occupied buyers can be allowed to
make a reasonable offer. Great
I wonder if this policy change is a result of many complaints
from eager buyers.