Buyers want to know what to do with investors scooping up rentals
Dec 02, 2022By Pat Kapowich | Published: November 19, 2022 | For the Bay Area News Group and its flagships The Mercury News and East Bay Times
Q: We are homebuyers who lost out to cash-paying investors. The winning buyers turned the houses into rentals. It’s beyond frustrating.
We have relatives who had bought foreclosures. You have written that after the 2007-2008 housing meltdown, investors scooped up hundreds of thousands of California foreclosures. If that is the case, what good is waiting for foreclosures if we compete with individual or institutional investors who want another rental property?
A: The foreclosures that we will see nationwide most likely have a loan generated before or during the financial crisis of 2008. Other circumstances might bring a residential property into the foreclosure process. Foreclosures have been and will continue to be a small percentage of the housing inventory due to several factors, including but not limited to: better lending practices due to the Dodd-Frank Act of 2010, lower interest rates, rising property values boosted equity positions in properties, personal savings increased dramatically, and a historic low unemployment environment.
The excellent news is that Assembly Bill 2170 (Residential real property: foreclosure sales act) was approved by the California governor on September 30, 2022. It gives owner-occupant homebuyers a “first look.” There are 58 counties in California. I’m not sure where you want to buy, but thanks to AB 2170, there might be a foreclosure purchase for an owner-occupant like you.
Thankfully, this law mimics the federal First Look Program. The news release from the Federal Housing Finance Agency on September 1, 2021, states in part: “First Look Program, the Federal Housing Finance Agency (FHFA) extended from 20 to 30 days, the period during which owner occupants, public entities, and nonprofits will have exclusive ability to buy Fannie Mae and Freddie Mac (the Enterprises) real estate owned (REO) properties before they are available for investor purchase.”
Assembly Bill 2170 states, “This bill would prescribe requirements that would apply to sales of real property containing one to 4 residential dwelling units, inclusive, that is acquired through foreclosure under a mortgage or deed of trust by an institution or that is acquired at a foreclosure sale by an institution, as defined. The bill would require the institution, during the first 30 days after a property is listed, as specified, to only accept offers from eligible bidders, as defined, and to respond, in writing, to all offers received from eligible bidders before considering any other offers.”
Eligible bidders are defined as follows: “2924p. (a) (2) Promote owner occupancy by enacting legislation consistent with the provisions of the federal First Look program that provides owner-occupants and affordable housing providers an opportunity for their offers to be considered on foreclosed properties prior to other offers.”
It is not the first legislative win for struggling homebuyers and affordable housing advocates. You can be sure it won’t be the last.
Questions? Or are you or someone you know navigating life’s transitions? Let lauded negotiator Pat Kapowich make your next move easy. Visit Kapowich’s website for free area housing data, insights and trends. Or put his artful blend of specialized credentials, decades of experience and endorsed skill set to work for you. Kapowich instills confidence when buying, selling, relocating or resizing homes. Do not just make a move — make the best move. Contact him today, Realtor Pat Kapowich, a career-long consumer-protection advocate.
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