NEW YORK (TheStreet) -- Investors are crowding out home buyers in the foreclosure market, bidding for properties in bulk and converting them into rentals, leaving owner-occupants with a frustratingly limited supply of low-priced homes.
At Fannie Mae (FNMA), however, owner-occupants continue to come first.
"Our goal is to sell [foreclosed] properties at market-competitive rates to owner-occupants as often as possible," says Andrew Wilson, spokesperson for Fannie Mae.
"Owner-occupants often are willing to pay a higher price than investors," said Wilson, since they are in it for the long haul. On the other hand, "Investors are looking to make a profit, they want to buy at a lower price, fix up the house and sell or rent it out," he said.Secondly, Fannie Mae is focused on stabilizing communities that have been hurt by a large number of foreclosures and allowing them to recover. The thinking is that owner-occupants tend to build communities, as opposed to investors buying vacation homes or renting them out. Through its "First Look" program, which it launched in 2009, Fannie Mae offers homebuyers a chance to bid and purchase foreclosed properties before they are made available to investors, usually within the first 15 days from the time a property is listed. The program is available to buyers who intend to live in the home at least for one year from the time of purchase. It is also open to non-profits and public entities. Fannie Mae sells about 60% of its properties to owner-occupants. The continuing emphasis on owner-occupancy could be one reason why Fannie Mae and its sister mortgage giant Freddie Mac (FMCC) have been relatively slow to take advantage of the boom in single-family rental business. As TheStreet noted in an article Wednesday, Fannie Mae is yet to expand the foreclosure-to-rental pilot program that it launched last year, despite the fact that Wall Street is pumping billions of dollars into this business. Fannie Mae and Freddie Mac, also known as government sponsored enterprises or GSEs, together own over 150,000 foreclosed homes that should be ripe for the picking for investors scouting for bulk deals. Fannie Mae says it is still waiting for approval to proceed with the program from its regulator, the Federal Housing Finance Agency. The FHFA , in turn, has said it is still evaluating the pilot program and the evolving market dynamics.
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