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First REO-to-Rental Transaction Closes

A program that converts foreclosed properties owned by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. into rental properties through the sale to approved investors has generated its first transaction.

In an effort to unload real-estate-owned properties at Fannie Mae and Freddie Mac, the Department of Housing and Urban Development, the Department of the Treasury and the Federal Housing Finance Agency proposed in August 2011 to convert REOs into rentals.

This past February, a pilot program was launched where pre-qualified investors submitted applications to purchase pools of distressed Fannie Mae assets that included nearly 2,500 properties.

In July, winning bidders were selected and the first transactions were set to close.

On Monday, the FHFA announced that Pacifica Companies LLC purchased 699 REOs owned by Fannie. Each of the properties is located in Florida.

The announcement indicated that all properties were sold near or above market value.

“FHFA will announce the winning investors for properties in other areas upon closing of the transactions in the coming weeks,” today’s statement said.

The regulator noted that 541 REOs in Atlanta originally included in the planned sales were not awarded. Instead, the Atlanta properties will be evaluated for disposition through Fannie’s retail sales operation or through future structured transactions.

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