As big banks and Fannie Mae and Freddie Mac push foreclosures through the pipeline, the inventory of REO (bank-owned) properties is rising.
That pushes distressed and overall home prices down.
Note in California, median home prices took their steepest dive in May, down 8.2 percent year over year to $280,000, as distressed sales made up more than half the market.
Nobody knows all this better than mortgage giant, government-owned Fannie Mae , which at the end of March had more than 153,000 single family foreclosed properties on its books, worth $14.1 billion.
Fannie acquired 53,549 foreclosed properties in the first quarter, up from just under 46,000 in the previous quarter.
No surprise they are now adding incentives to unload these properties: The expanded incentives offer qualified homebuyers up to 3.5 percent of the final sales price to put towards closing costs.
In addition, selling agents representing the owner-occupant buyer can now receive a $1,200 bonus. The incentive must be requested in the initial offer.
Eligible initial offers must be submitted on or after June 14 and must close by Oct. 31, 2011. Investor sales are not eligible for the incentive.
Note, however, that these incentives are only for owner-occupants, not investors.
Fannie also has a rule that owner-occupants get a “first look” at REOs before investors can bid.
I understand the reasoning: “By encouraging homebuyers who will make these properties their long-term home, these expanded incentives will help to stabilize communities,” said Ed Neill, senior vice president for Credit Loss Management at Fannie Mae.