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Tags: Foreclosures | Rentals | homes | housing

Govt Moves to Convert Foreclosures to Rentals

Monday, 27 February 2012 03:31 PM EST

The Federal Housing Finance Agency will begin inviting bids from investors to buy packages of foreclosed properties to be offered as rentals.

The agency today said it will send detailed information to investors who qualify to participate in the bulk-sales pilot program. Foreclosures will be marketed in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida, according to a statement posted by the agency on its website today.

The program is limited to properties owned by Washington- based Fannie Mae, which sells and guarantees home loans. The subprime lending collapse left the company with more than 122,000 foreclosed homes, also known as real-estate-owned or REO, when loans that it guaranteed failed. Fannie Mae and its smaller rival, Freddie Mac, were taken under government conservatorship in 2008 amid mounting losses. Freddie Mac will not participate in the pilot programs.

Under the pilot program, the first large-scale bulk sales effort by FHFA, investors will agree to be equity partners with Fannie Mae.

“This is another important milestone in our initiative designed to reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace,” FHFA Acting Director Edward J. DeMarco said in a written statement.

The agency announced its intent to commence the program and invited investors to apply on Feb. 1.

To participate, investors must show that they have the experience and financial capacity to purchase and manage the properties, the agency said. Once they qualify, they’ll receive detailed information about the properties. To bid on the homes, qualified investors must post a security deposit and sign a confidentiality agreement to gain access to detailed information, according to the news release.

Qualified Investors Only

“Only investors who are qualified through this rigorous process will be eligible to bid,” the agency said.

Freddie Mac will “evaluate the pilot with our conservator and make a decision after that,” Brad German, a spokesman for the McLean, Virginia-based mortgage company, said in a telephone interview.

Today, California Attorney General Kamala Harris asked DeMarco to suspend some foreclosures on Fannie Mae and Freddie Mac loans.

In a letter to DeMarco, Harris requested a suspension of foreclosure sales in California for the more than 60 percent of loans owned or guaranteed by Fannie Mae and Freddie Mac.

Harris wants the sales halted until “your agency has completed a thorough, transparent analysis of whether principal reduction is in the best interests of struggling homeowners as well as taxpayers,” according to the Feb. 24 letter.

© Copyright 2024 Bloomberg News. All rights reserved.

Monday, 27 February 2012 03:31 PM
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