The Federal Housing Finance Agency on Wednesday increased the number of days it locks investors out of foreclosure property bidding in order to give others more time to get a first crack at buying homes.
Owner-occupants, nonprofits and public entities now have 30 days to exclusively bid for real-estate owned properties under Fannie Mae and Freddie Mac’s First Look programs, up from 20 days previously.
The change comes amid a broader push by the Biden administration to boost affordable housing in a market where
“Extending the amount of time owner-occupants have to bid on a REO property without competition is especially important for neighborhood preservation while the supply of homes for sale is limited,” said Sandra Thompson, acting director of the FHFA, in a press release.
She characterized the change to the government-sponsored enterprises’ program as “one step in addressing the gap between supply and demand of single-family homes.”
Distressed asset specialists and lenders predicted the move would likely have only an incremental impact on their market.
“It gives a small pool of qualified people longer to make a decision. I don’t think it is going to increase sales through the program significantly,” said Richard Kruse, principal at distressed asset manager Gryphon USA, in an email.
"By allowing a 30-days lockout period for investors (instead of 20-days), [the GSEs are] giving a longer time period [to] homebuyers who will live in the home as their primary residence versus investors who will buy it as an investment property. In my opinion, albeit in a very small way, it definitely helps homeowners," said Shashank Shekhar, CEO of InstaMortgage, in an email.
Foreclosure inventory is currently low and how “affordable” distressed properties are may depend on the extent of repair they need, but initiatives like the First Look extension and other measures announced by the Biden administration Wednesday are aimed at addressing a true challenge in the market, said Rick Sharga, an executive vice president at RealtyTrac.
“Affordable housing is a legitimate problem, and not getting better as home prices go up year after year. So the fact that we have an administration that is attempting to do something concrete and something measurable, I think is at least a step in the right direction,” he said.
The First Look program’s timeline has slowly been expanded since it first started at 15 days in 2009. It was extended to 20 days in 2014.
