Posts Tagged "Bulk"

Fannie Mae and Freddie Mac To Sell Bulk Foreclosures to Investors

on May 14, 2012 in HARP Refinance | 40 comments

Fannie Mae and Freddie Mac To Sell Bulk Foreclosures to Investors

by the|G|™ Fannie Mae and Freddie Mac To Sell Bulk Foreclosures to Investors Article by Jeremy Redlinger There have been talks for a while now suggesting that Fannie Mae and Freddie Mac were going to test out the waters for unloading foreclosed properties on renters and have finally structured a program to do just that. The Obama administration has announced that a “pilot program” is in hand and it will make foreclosed properties owned by Fannie Mae and Freddie Mac available to investors, site ed in bulk, buy diagnosis who intend to rent out the rehabbed properties. Currently Fannie Mae and Freddie Mac own 250, stuff 000 properties across the nation, and with a backlog that goes on for miles, they need to start clearing up their books to stabilize home values and revitalize communities. The foreclosed properties would be sold in bulk, likely based in geographical areas, and will be focused on the hardest hit communities throughout the pilot program. Investors would buy in upwards of 50 properties at a time and repair the homes to livable conditions and rent them out. “We expect several pilots that will involve both local investors and institutional investors. The goal here is to reduce supply by converting foreclosed homes into rental units,” says Jaret Seiberg of Guggenheim Securities. “Less supply — even less fear about a flood of foreclosed homes hitting the market — could stabilize [home] prices.” A number of investors have showed interest in purchasing foreclosed Fannie Mae and Freddie Mac properties, but finding or creating financial guidelines to purchase properties in bulk will be a challenge. As learned with other governmental sponsored programs, just because the government makes it possible doesn’t mean that banks have to lend the money. There are still hundreds of underwater home owners who have remained on time with their over priced homes but are still seeking refinancing terms promised in the Home Affordable Refinance Program II (HARP 2). However, if the government and the lending institutions are able to negotiate terms to make buying foreclosure in bulk possible there are still other obstacles to tackle to make the program a success. When purchasing properties in bulk you are going to need property management companies to handle a lot of the tasks of being a land lord. Hiring a property management company will drive up the cost of rent, so investors are still looking over the numbers trying to determine what markets are right based on local rental prices. “I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale,” says Laurie Goodman of Amherst Securities. “But that means they have to build out a rental organization; it means they build out a management company, because if you’re accumulating a hundred homes in Dallas that’s very different than running a multifamily building.” If successful the program is really designed to predict where foreclosures will be in the future and how to minimize loses. Investors are looking at this project as a tool to help them manage the flow of foreclosures over time and a way to bring back private capital to the housing market. About the Author My name is Jeremy Redlinger and I have been in the mortgage industry since the age of 22. My philosophy is to cater to the needs of homeowners by education. If you enjoyed this article, you can find many more like it on just about any topic when it comes to financing a home on my website Minnesota Mortgage. If you would...

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