Tony Alvarez analyzes WSJ article on new Fannie Mae foreclosure program

Fannie Mae Looks to Level Foreclosed-Home Playing Field

(See Tony's comment's in red below the article)

By JAMES R. HAGERTY Fannie Mae announced a program aimed at helping ordinary home buyers compete with investors for foreclosed homes.  Under the program, dubbed First Look, Fannie plans to consider offers only from potential owner-occupants and certain public-housing entities during the first 15 days in which a foreclosed home is on the market. Fannie and its main rival, Freddie Mac, are government-controlled companies that buy or guarantee home mortgages. They are among the biggest owners of foreclosed homes. As of Sept. 30, Fannie said it had 72,275 single-family foreclosed homes on its books. Freddie had 41,133 as of that date. Many investors can move faster on home purchases because they are able to pay cash and don't have to wait to qualify for a loan and get an appraisal. Investors often turn the homes into rental units or flip them to other buyers for a quick profit. People seeking to take advantage of the drop in housing prices to buy their first homes have been grousing that they often lose bidding wars to investors. Fannie said it also would help owner-occupants acquire homes by reducing deposit requirements to as little as $500 and giving them a chance to renegotiate offers after appraisals. Such buyers also are to be allowed as many as 45 days to complete the transaction, up from the usual 30 days.for purchase of homes from Fannie. A Freddie spokesman said that company has similar pilot programs and is helping owner-occupants pay closing costs. Fannie's supply of foreclosed homes is likely to keep growing. It also announced Tuesday that 4.72% of the single-family home loans it owns or guarantees were 90 days or more overdue in September, up from 4.45% in August and 1.72% in September 2008. Write to James R. Hagerty at bob.hagerty@wsj.com  Tony's Comment's: Lies, lies, lies!  It's all good news! Don't let your brain become the enemy. At first glance you might think that they're picking on investors again. But nothing is further from the truth. If you remember that all decisions that the government make are politically motivated you will understand the goal they are trying to reach more clearly and if you can do this you'll be better equipped to position yourself to take advantage of what they really mean by their actions. The 15 day "First Look" Program has actually been in test mode since August 2009.  And what has this accomplished?  New buyers competing with each other like mad dogs to pay higher prices for inferior inventory, of which, most sales have fallen apart within 15 days of an opened Escrow. The best part about these new idiotic decisions is further proof that as the government and banking get more desperate, financing is getting easier. Investors might look at these new changes and think 'uh oh' they're picking on us again. But that's the big lie. Don't stop and hesitate what you are doing for one second. If you do then you drop the ball. This is not the moment to run scared and throw our hands in the air thinking that our potential for doing business in this market has been taken away. It has not. Here's what I want you to pay attention to most - the Federal Government and Lending Industry will always remove restrictions on financing for the first time or typical home buyer before they do anything for investors. Because that is what is politically correct in this present political climate. Bernanke is a puppet just like all Fed Chairmen have been since the inception of the Fed on Jackal Island. Our president, though highly educated, knows less about the financial market than my ten year old grandson. And that's why he has begun to shut his mouth with respect to financial matters. If you think that any of the decisions coming out of Washington, D.C. have any other agenda besides a political one, you are highly mistaken. As I have been telling you time and time again, the closer we get to any political election the more generous the government (and government agencies, such as Fannie Mae and Freddie Mac and the rest of lending industry) will become with respect to their lending policies across the board. Whatever perks you see awarded to home buyers will soon be followed by similar perks for investors. They have no other choice. The reason for this is GREED, it is in their best interest to do so. Whoop-tee-doo. They got us on the ropes now.  What are we to do?  Stay focused on your target market, keep watching all your market stats and stay friendly with all the REO brokers and other crucial business people in your target market.  Patience is the name of the game. Tony Alvarez

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Sincerely,

The REO Mentor
Tony Alvarez