28 Feb Foreclosure Rental Program By Fannie Mae And Cramdown in Chapter 13 Bankruptcy
Fannie Mae has decided to sell 2500 foreclosed homes to investors to use as rentals. The homes in the program are currently rental properties. Fannie Mae is allowing investors to bid on the entire portfolio of 2500 homes or bid on the homes in each region.
The hope is that by allowing investors to purchase properties in bulk that they will be able to reduce their foreclosed home inventory more quickly than by traditional sales to homeowners and investors. Right now Fannie Mae has around 140,000 foreclosed properties on their books, if this auction is successful you will see more homes auctioned in the future.
I am sure when they look at the cost of marketing all of these properties and paying real estate fees this option seems attractive, the sooner the foreclosed homes get purchased and rented, the sooner home prices can begin to recover. Right now the biggest drag on the housing recovery is the glut of foreclosed properties held by Fannie Mae and Freddie Mac.
Warren Buffet stated that he would buy millions of rental properties right now if they were available, that means that he is bullish on the prospects of recovery in the U.S. Housing market.
The other proposal that would prevent foreclosures in the first place, is allowing homeowners to cram down their mortgage in a chapter 13 bankruptcy. The homeowner would then be able to stay in the home that is valued at the market rate, saving Fannie Mae and Freddie Mac the costs associated with foreclosure and resale of the property.
I have seen a number of clients who would have stayed in their homes if they could reduce the loan on their home to the actual value of the property.