First Look

First Look is the cornerstone of the National Community Stabilization Trust’s REO Acquisition Program.

The primary goal of First Look is to create an opportunity for local programs to inspect and purchase foreclosed and abandoned property prior to the marketing of those properties to other competing investors or buyers by the financial institution. With First Look, the Stabilization Trust helps community buyers purchase the most strategically important properties at a price that reflects the savings that will accrue to the REO seller by virtue of an expedited sale.


The Stabilization Trust originally established a ‘First Look’ pilot program in the cities of Minneapolis and Saint Paul and in cooperation with Wells Fargo in the fourth quarter of 2008.  Early results from the pilot were promising, and lessons learned helped form the basis of the national First Look program. Several of the nation’s most prominent financial institutions, including Bank of America, Citi, Chase, and Freddie Mac, joined as early leaders in making REO inventory available to communities on a First Look basis, as the program was expanded nationally.  As of the end of 2010, more than 150 local governments or community-based housing providers were participating as property buyers through the Stabilization Trust, representing hundreds of communities across 41 states.

Why First Look?

First Look was initially devised as a method by which NSP grantees could achieve the discount required on foreclosed property acquisitions by NSP guidelines.  However, First Look quickly gained traction as a critical tool for municipalities and locally based housing providers to gain access to foreclosed and abandoned properties in targeted neighborhoods without facing competition from investors and in a more streamlined and predictable manner that saves valuable time and resources.

The First Look Program takes advantage of the initial period of REO ownership, when a financial institution is preparing a property for sale, to give Stabilization Trust’s partners an opportunity to inspect and buy the property.  For buyers, this exclusive window of access to inspect and decision a newly available REO property insulates them from competition from other entities and ensures that the properties necessary to community revitalization plans can be acquired.  For financial institutions, a First Look sale to a municipality or local housing provider provides the opportunity to off-load a foreclosure more quickly and at less expense than a traditional sale, and advances its commitment to community revitalization.

A quicker sale saves a financial institution the costs of managing and marketing the REO property and helps to avoid many holding costs including maintenance, renovation, security, property taxes, insurance, and risks associated with a declining real estate market, such as potential vandalism and property value deterioration. The Stabilization Trust asks that these savings are then passed on to the buyer as pricing adjustments, which among other benefits satisfy federal requirements on NSP funds.


First Look Process

Participating financial institutions regularly provide the Stabilization Trust with updated lists of eligible properties as they become available within the neighborhoods targeted by Stabilization Trust community buyers. Newly available First Look properties are uploaded by the Stabilization Trust into REOMatch for its community buyers to view and those organizations have 24 hours to indicate whether they are interested in inspecting the properties. Interested buyers are then given five days to review and inspect the properties, develop a rehabilitation plan, conduct a valuation of the properties, and indicate to the seller of the property whether they will pursue the acquisition of the home, or pass on the property.

During this First Look period, the financial institution continues to prepare properties for sale via their normal REO disposition process. As a result, financial institutions participating in First Look are not impeded from pursuing conventional marketing of REO properties should the community buyer decline to acquire the property within the First Look period. The program provides REO Sellers with an additional method to market the property – and a strategy that may result in a quicker sale. 

Standardized Acquisition Procedures and Timelines

The Stabilization Trust has worked with its financial institution partners to establish a variety of procedures to expedite and standardize REO sales. Community buyers participating with the Stabilization Trust are required to follow these established procedures, utilize standardized documentation for each transaction, and adhere to set timelines within the acquisition process.   The Stabilization Trust remains involved in each step of the transaction through its Transaction Desk, a team of dedicated professionals that oversee each transaction.  The Transaction Desk is responsible for monitoring the performance of the parties involved to ensure that they fulfill their obligations and that the process works efficiently. 


A financial institution participating in First Look calculates the price at which it is willing to sell a property to the Stabilization Trust community buyer via the net realizable value (NRV) process. This price offered to the community buyer is the based on subtracting the various carrying and marketing costs from the current market value of the property. The net realizable value will typically result in a price reduction that satisfies the “discount from market value” requirement of the HUD Neighborhood Stabilization Program (NSP).

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