Program may level housing sale odds

A pilot program from Fannie Mae could help level the playing field between cash-laden investors and owner-occupants bidding on low-priced foreclosure homes in Las Vegas, the president of a real estate organization said Thursday.

Fannie Mae is extending the "First Look" grace period in Nevada from 15 days to 30 days effective Monday. That gives buyers who plan to make the home their primary residence first shot at purchasing a foreclosure within 30 days of its listing.

Typically, these buyers are up against multiple cash offers -- anywhere from five to 20 -- on homes priced below $150,000, said Noah Herrera, president of Nevada Association of Hispanic Real Estate Professionals.

At least 50 percent of foreclosure sales in Las Vegas are cash-only transactions, he said.

"We're seeing investors come back in droves, all the real estate seminars in Las Vegas," Herrera said. "We've got literally thousands and thousands of prequalified buyers right now sitting on the sidelines. If you're the bank, what are you going to look at -- a cash offer that is very close or financed?"

The bank will almost always take the cash offer because there are no contingencies, no appraisal required and no conditions such as the pending sale of another home, he said.

All-cash, owner-occupant purchases will require certification as an addition to the Fannie Mae purchase addendum. Properties that go to contract before the end of the 30-day period and subsequently fall through will be relisted with a new 15-day marketing period.

First Look will help get more owner-occupants into Fannie Mae foreclosure homes, which make up the bulk of the market in Las Vegas, Realtor Steve Hawks said.

"This will finally give some hope to homeowners that are losing out to investors," he said. "This will greatly help the local market and stabilize the community again."

Banks are not committed to taking the first offer and have certain rules to follow as third-party loan servicers, said Jumana Bauwens, spokeswoman for Bank of America in Los Angeles.

A majority of the 14 million home loans in Bank of America's portfolio are owned by investors, dating back to when they were originated by Countrywide Mortgage, she said. Those loans were sold on Wall Street to investment firms and pension funds.

"So when it comes to short-sale transactions, we can't just approve it up front. We have to get the investors to approve it," Bauwens said. "It's a little less complicated for foreclosures, but there's still rules to follow."

Fannie Mae Chief Executive Officer Michael Williams said the 30-day period could later be replicated across the country if it succeeds in Nevada. He estimated the potential cost of carrying the properties on the books for a longer period of time at $60 million nationwide.

"However, given the unique market conditions in Nevada, we found it to be cost-neutral to extend the grace period from 15 to 30 days across the state," Williams wrote in a letter to Sen. Harry Reid, D-Nev. Reid had requested the extension after a meeting with Herrera in Washington.

Herrera said investors have been pulling money out of their "hemorrhaging" market portfolios and directing it toward Las Vegas real estate.

"Things are starting to change," he said. "To bring sustainability into the community, we need people living in the house."

More information on the First Look initiative and Fannie Mae-owned properties can be found at www.homepath.com.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.