What is the Freddie Mac First Look Initiative
The Freddie Mac First Look Initiative is an exciting program that is part of the First Look Program. The Federal Housing Finance Agency (FHFA) launched the First Look Program in 2009. The program created the opportunity for certain people to buy Fannie Mae and Freddie Mac real estate owned properties before other investors. This approach provides the opportunity for individuals to access real estate properties at more affordable prices.
Brief Background on Freddie Mac
Freddie Mac is a government-sponsored enterprise (GSE) that focuses on buying mortgages in the United States. Fannie Mae is the other GSE that focuses on mortgages. We discussed the roles of Fannie Mae and Freddie Mac in another article, however it is worth reiterating the fact that both entities are crucial players in the United States mortgage market. Freddie Mac buys mortgage loans from banks and lenders and typically resells the loans.
It has the exact same business model as Fannie Mae. However, Freddie Mac was founded over 30 years after Fannie Mae (in 1970 to be exact). With the background lets go over everything you need to know about the Freddie Mac First Look Initiative
Freddie Mac First Look Initiative Is Open To All Home Buyers
The program is actually open to all owner occupant home buyers. What this means is that you do not have to be a first-time home buyer to participate in the program. The program is also open to two other groups: neighborhood stabilization program (NSP) grantees and non-profits engaged with community stabilization efforts.
Home buyers, NSP grantees and non-profits that fit the aforementioned criteria are the only participants competing to buy the homes during the First Look Period. This increases affordability because there’s less competition for properties.
The only catch for home buyers is that they must be buying the home as their primary residence. Said another way, to participate in the program you actually must intend to live in the home. In fact, buyers have to sign an agreement of purchaser affidavit affirming that the buyer will occupy the home as their primary residence.
Freddie Mac First Look Initiative Focuses on HomeSteps Homes
HomeSteps is the division of Freddie Mac that handles its real estate sales. The division’s stated goal is to “maintain and sell its properties in a timely manner to preserve local property values”. The division also requires all vendors that sell or service HomeSteps homes to follow strict guidelines.
Specifically, the home has to be in certain condition within three business days of its purchase by HomeSteps. First, the home must be secure. Second, any trash inside or outside the home must be removed. Third, the lawn must be properly maintained and the process of cleaning the home, both interior and exterior, must be initiated.
You Have 30 Days To Submit And Offer
By far the key feature of the Freddie Mac First Look Initiative is the 30-day exclusivity period. For the first 30 days of a listing HomeSteps will only consider purchase offers from owner-occupants, NSP grantees and certain non-profits. After the 30-day period has expired HomeSteps will consider offers from other buyers.
The process for submitting an offer is very similar to the process you would follow if you were buying a home. However, HomeSteps suggests that your offer be in writing and that the terms are clearly stated in the contract documents. In addition, all buyers must sign and date the contract.
Homes Eligible For the Program Will Be Listed in MLS
All homes that are eligible for the Freddie Mac First Look Program will not only be listed in the MLS database, but their eligibility will be noted in the property listing remarks. Moreover, eligible homes will be clearly marked with the First Look icon.
The FHFA recently extended the first look period to 30 days
On September 1, 2021 the FHFA announced that it would increase the exclusivity period from 20 days to 30 days. Prior to this change, owner occupants, public entities and nonprofits had only 20 days to buy Fannie Mae and Freddie Mac real-estate owned properties without competition from investors. This extension increases the exclusivity period by 50%.