Fannie Mae: First Look

Todd: Hello and Welcome to Todd Miller TV. I am joined here with the Fannie Mae Listing agent Oana Sterlacci. Oana thank you for being here.
Oana: Thank you for having me.
Todd: So, I wanted to talk about something called “First Look”. It is a Fannie Mae program.
Oana: And a lot of investors are coming out with cash, they’re buying all these properties and a lot of people who just wanted to be homeowners maybe get a loan, maybe they’re offer’s not as competitive because they’re not just gonna throw down cash and close in 20 days, so tell me about how Fannie Mae has sort of/what policy they have in place to help promote home ownership?
Oana: Well, first of all, Fannie Mae is not the only entity that has the First Look program. First Look pertains to a program that says only owner occupants, that means that it’s going to be the person’s primary residence. Not a vacation home or a 2nd home but their primary residence. So a lot of institutional sellers are doing that. The idea behind First Look is to promote home ownership, to stabilize neighborhoods by putting home owners in there and not having at the investments. Because the thought is, that if you out a home owner in a home, the home will be better cared for and it will stabilize a neighborhood rather than an investment property. Fannie Mae has the longest First Look property of any institutional seller. Some sellers have a 7 day, some have a 10 day, some have a 15 day. Fannie Mae has a 30 day First Look policy.
Todd: But that’s just here in Nevada right?
Oana: Yes, just here in Nevada.
Todd: Everywhere else is 15.
Oana: So, you make a really good point. Throughout the nation, the Fannie Mae First Look policy is 15 days. In Nevada, Senator Harry Reid along with NAHREP which is the National Hispanic Organization, they’ve pushed for a 30 day first look because they felt that that would give home owners a better chance at getting these properties and it would help stabilize prices, neighborhood and that sort of thing.
Todd: How do they know? What if a home owner just has cash and they wanna buy, what/how does/how do they know that they’re not owner occupant? How does that work?
Oana: Well, what the institutional sellers do is they do a several different things. One, they actually send somebody out to visit the property periodically. Somewhere between 60 and 90 days. And that can go on for several months. The other way that they research is through utilities. They actually verify in whose name the utilities are. Another way that they do that is through the post office, whose getting mail at that address.
Todd: Upfront, the very beginning of the process that how do they know, how do they know that you know, if there’s a 30-day period no investors? How do they know if somebody just submits an offer?
Oana: Okay.
Todd: How do they know if they’re investor or not?
Oana: 2 different ways. One, during the first look period, if it’s an owner occupied, then they have to actually sign a certification that says that under the penalty of forgery, they’re certifying that this will be their primary residence.
Todd: Okay.
Oana: The second one that they do that is actually put that burden on the listing agent and we actually have to research the perspective buyer and we do that through several ways. One of the basic ways that we do has to a Tax Record. We search to see if they own other properties in the area.
Todd: What if their name is John Smith?
Oana: You know if they have a common name like that clearly, there is not much a listing agent can do. We’re going to have to rely on their certification that they will be the primary person living in the house.
Todd: So if their name is Bignou Brezenski and you find that they have 18 other houses in their name, and they give you a letter saying they’re gonna be an owner occupant but it’s in the neighborhood they already own, 5 houses in and this is a $40,000 house they’re paying cash for, how does that/if they just try to self certify I’m an owner occupant?
Oana: Right. You know, remember, I’m the listing agent. I am not the seller.
Todd: Okay.
Oana: So it is my job to provide all that information to the seller and it’s the seller’s decision how they choose to proceed.
Todd: So Fannie Mae has got a policy in place. It’s probably not anything’s a 100% effective. But it does atleast allow owner occupants for a shot. Do you see on Fannie Mae properties in the first 30 days that they tend not to sell right away because there aren’t that many owner occupants, on day 31 all of the sudden offers flooded or how does that usually work?
Oana: It absolutely does. You know we have a lot of agents who calls and say “Hey, how many days are left in first look? When should I submit my offer?”
Because what happens is, if I have an investor who submits an offer during the first 30 days, then I have to present that offer and that offer is summarily rejected and then that buyer is encouraged. So we submit the offer after 30 days.
Todd: Is there an online resource if they’re looking at a house and find out that it’s a Fannie Mae they can figure out how much is left in First Look?
Oana: Absolutely. They have the same resource that all the listing agents have. This is not a private or a secret thing. You go to homepath.com , and you put the property address, and then like in the middle of the page, usually in red, it’ll tell you how many days left in First Look. If it doesn’t say anywhere on that page, anything about about days left in First Look, then that property is out of first look and it’s eligible for investor purchase.
Todd: Good. Well, alright. Thanks you very much.
Oana: You’re welcome.
Todd: That is the update for today. I hope you found it informative and I’ll look forward to seeing you on the next show. Thanks.