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FHFA may convert GSE-held homes to rentals affordable homes
WASHINGTON (8/11/11)--The Federal Housing Finance Agency (FHFA) is seeking outside opinion on how best to maximize value to taxpayers and increase private investment in the housing market while disposing of single-family real estate owned (REO) properties held by Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac and the Federal Housing Administration (FHA). The U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) are also participating in the initiative. FHFA Acting Director Edward DeMarco in a release said that the GSEs will still market REOs for sale for the time being, but will investigate other opportunities that would reduce GSE credit losses and help stabilize home prices and neighborhoods. HUD Secretary Shaun Donovan added that with “half of all renters spending more than a third of their income on housing and a quarter spending more than half,” the government must “find and promote new ways to alleviate the strain on the affordable rental market.” Among the approaches being considered are converting government-held homes into rental units or affordable housing. The FHFA calls for approaches that achieve the following objectives:
* Reduce the REO portfolios of the GSEs and FHA in a cost-effective manner; * Reduce average loan loss severities to the GSEs and FHA relative to individual distressed property sales; * Address property repair and rehabilitation needs; * Respond to economic and real estate conditions in specific geographies; * Assist in neighborhood and home price stabilization efforts; and * Suggest analytic approaches to determine the appropriate disposition strategy for individual properties, whether sale, rental, or, in certain instances, demolition.
For the full FHFA release, use the resource link.
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