HomePath "FirstLook" - what prevents me from making an offer?

Question

I'm looking at a property from FannyMae that just hit the market. However, it's tagged with their "FirstLook", which means they only accept offer from OOs and "buyers using public funds" for the first two weeks.

My question is - what prevents me from making an all cash offer right now? Maybe I'd really like to live in that unit, but once I fix it up, I realize that I don't want to live there at all?

I don't understand the reasoning behind FirstLook - it seems investor offers would be a good thing? (I know - that's a whole different thread).

Would I risk getting black listed by FM or angering the selling agent?

I'm just trying to gauge how to proceed here...

Thanks,

\ Henrik

Kathy V. · Answer

It's ironic that this program was set up to reduce investors competing. It does the exact opposite!

All the investors line up their offers and then on day 15~~viola!! Competition galore!

This is how I got both of my rentals. Had the offers written, submitted on day 15. Negoiated that day...done.

If you really want the house, get your offer submitted.

Jason S. · Answer

This is what they are trying to avoid.

Recently I sold a fix/flip to an end buyer, the kid had made an offer on every home in the neighborhood for 18 months but had a loan, and every other home was sold to investors who kept them as rentals.  Mine, which he bid on before I fixed it, he also lost to a cash investor, me.  Fortunately he was able to buy from me and got a better home than he would have originally.

But in the end, investors, who were gathering up rentals, were in fact crowding out this homeowner because he did not have cash - and this is a neighborhood that needs the stability of homeowners desperately.

Seems to me, the First Look program at least gives guys like this a fighting chance.

D.L. Berry · Answer

The Fannie Mae "First Look" program was structured specifically to eliminate competition between investors and owner occupants, for a period of 15 days, 30 in Nevada. We've also seen them extend the "First Look" period. As far as that contract goes there is supposed to be a affadavit signed at closing spelling out that this is your principal residence for a year. In this day and age when everyone wants to yell mortgage fraud, I'd hate to run afoul of that principal residence concept...Good luck...

Don Hines · Answer

I never miss an oportunity to get my dig in on FNMA....
This was recently discussed in another thread. But, the 125% finance restriction is ironic too. I would like to borrow more than that to hire contractors with..., Be an American and provide jobs ETC. You have to wait 90 days and spend more money to modify or refinance a loan. 
Don

Account Closed · Answer

Your contract (or an attached disclosure) should specifically state that you do NOT intend to occupy the property as your residence.

The listing broker has specific instructions from the seller to hold all non-OO offers until the "First Look" period expires. State and federal law requires all offers to be submitted anyway, so the seller will also hold the non-OO offers until after the "First Look" period expires. Don't put the broker in a bad spot by submitting a non-OO offer before the expiration.

Use the "First Look" waiting period for a detailed inspection with your General Contractor to write a "scope of work" estimate with labor & material costs. Get your financing ready and submit an all cash offer with proof of funds at soon as the waiting period expires.

Never sign an affidavit without your attorney reviewing and approving it.

Beware of deed restrictions or performance liens that prevent you from reselling the property within a limited time period.

Kathy V. · Answer

Curt,
I think you have misunderstood me. I am buying as an investment, not OO. I'm not defrauding anyone.

Curt Davis · Answer

Yes, you are wrong.  Regardless of how one intends to purchased, during the first look period, if you buy the home and close on it and do not live in it within 2yrs and they find out especially if you rent it out you can face a huge fine.  The banks are not that stupid.  Trust me, I want to do the same thing but there are many other deals available, keep looking.

Kathy V. · Answer

Correct me if I'm wrong but the fundamental flaw with the First Look program(or any similar program) is the banks want the end buyer to be the OO but THEY CAN'T QUALIFY on the banks terms.

Enter: Investors.

Am I wrong in my thinking?

Curt Davis · Answer

You can face up to $250,000 in fine if they find out you dont live in the home for at least 2 years.  I wondered the same thing and figured its not worth the risk.  Move on and look for other deals.

John H. · Answer

I can't remember if it was freddy or fanny, but a few weeks ago, a listing agent basically talked me out of making a cash offer.

The sfr needed a total gut, new iso, plumb,electric and termite repair.  He said I had to sign a paper saying I'd live there 1 year and be moved in by 60 days.  I told him I work alone, by that time, i'd be lucky to have the sheetrock rehung.  He said they will likely check up on me and if im not moved in, they will fine me $10k and try to take the house back.  I decided not to make an offer.

I didn't verify this info with the lender, so it could be all hogwash, but I figured i'd pass on what a realtors take on it was.

HomePath "FirstLook" - what prevents me from making an offer?

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