FHFA's "Pilot Phase" for REO Initiative

Here is some more information about the Federal Housing Finance Agency's new REO Initiative regarding turning REO's into rentals. They are starting off simple with a "pilot phase" that is excepted to include 500 to 1000 homes provided by Fannie Mae. The GSEs have more than one million foreclosure properties in their possession.

The purpose of this pilot phase is to examine:

• Investor interest in various types of assets
• How investors can maximize the participation of experienced local firms and organizations that can provide the types of services and support needed for stabilization in the community
• The types of structures and financing that would improve returns to the sellers as well as the value of the homes
• The process that qualifies these investors and how they participate in sales transactions

There is no indication of a timetable for beginning bulk REO sales yet. The FHFA is hoping that this pilot phase will prove beneficial to investors, homeowners, GSEs and also to the economic status of the housing market and the country as a whole. Their focus is on the nation's hardest-hit areas first. They'd also like to improve REO sales for homeowners and small investors that will enhance the existing retail sales strategies of the GSEs.

Read More

REO Initiative to Rent Out Foreclosed Properties

The FHFA has announced the first step of an REO initiative that will aim to help the cities that got hit the hardest nationwide. Investors can pre-qualify to establish eligibility so they can bid on transactions during this initial phase. Qualified investors will be allowed to purchase foreclosed properties but they are required to rent these out for a specified number of years. The hope is that this rental period will provide relief for depressed housing markets that are overwhelmed by foreclosed properties, and will also provide more rental options. This should put the country one step closer to stabilizing communities and maximizing the value of homes.

This REO Initiative is partnered with the U.S. Department of the Treasury, the HUD, the FDIC, the Federal Reserve, Fannie Mae and Freddie Mac. They worked together to find options for selling single-family REO properties that are currently held by Fannie Mae, Freddie Mac and the FHA. During this first phase, Fannie Mae will offer pools of rental properties, vacant properties and non-performing loans focusing on the areas that were hit the hardest.

Those that have pre-qualified to receive more information about these properties must meet the following criteria: (a) financial wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity; and (c) agreement to keep certain information about the REO and related matters confidential.

Investors can register at the FHFA's REO Initiative page.

Read More