The first round of winners has been selected to purchase foreclosed real estate from Freddie Mac and Fannie Mae. The Federal Housing Finance Agency (FHFA) announced today that 2,500 single family homes had been awarded to successful bidders under a pilot initiative to convert real estate acquired by the two government sponsored enterprises (GSE) through foreclosure into rental property.
Successful candidates for purchasing properties from the GSE's real estate portfolio (REO) had undergone several steps in a qualification process before being permitted to bid on the houses which they had to agree to hold and rent for a period of time before reselling.
The properties were offered in sale pools which were geographically concentrated in various locations across the United States. The GSEs, FHFA and other federal agencies involved, Departments of Treasury, Housing and Urban Development, Federal Deposit Insurance Corporation and the Federal Reserve, had several goals for the program. They hoped to relieve the GSEs of the costs and administrative burdens of managing thousands of foreclosed properties, alleviate the blight imposed on communities by large number of vacant and possibly deteriorating properties, increase the rental stock, while at the same time not flooding the market with distressed properties.
FHFA described the response to the pilot initiative as "robust with strong qualified bidder interest." Some 4,000 responses were received to the initial "Request for Information" issued by the program sponsors last February, however beyond announcing that the awards had been made FHFA released no information on the names or even the numbers of successful bidders.
"FHFA undertook this initiative to help stabilize communities and home values in areas hard-hit by the foreclosure crisis," said Edward J. DeMarco, Acting Director of FHFA. "As conservator of Fannie Mae and Freddie Mac, we believe this pilot program will assist us in achieving our objectives and help to maximize the benefit to taxpayers. We are pleased with the response from the market and look forward to closing transactions in the near future."
