The much-anticipated program that will convert real-estate-owned properties into rentals is now underway.
Investors can now pre-qualify for bidding eligibility on REOs owned by Fannie Mae, the Federal Housing Finance Agency said in a statement Wednesday. The pre-qualification process is part of the pilot phase of the plan and promises to ensure that investors have the financial capacity and the operational expertise needed to manage the properties “in a way that is conducive to the stabilization of communities hard hit by the housing downturn.”
Investors will be required to keep information about the REOs and other matters confidential.
“When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery,” the White House said in a statement.
The program is expected to help reduce the inventory of unsold homes, stabilize housing prices and provide sustainable rental housing.
Fannie will kick off the initiative during the pilot phase by offering asset pools for sale. Freddie Mac and the Federal Housing Administration will subsequently join in.
The pools will include rental properties, vacant properties and non-performing loans.
It’s the first step in the program that was first announced in August 2011 by the Obama administration. It is targeted at the hardest-hit metropolitan areas.
The initiative was jointly developed by the FHFA, the Department of Housing and Urban Development, the Department of the Treasury, the Federal Deposit Insurance Corp. and the Federal Reserve as well as Fannie and Freddie. In addition, input was obtained from meetings with stakeholders and more than 4,000 responses to a request for information.
The pools of properties purchased through the program will be subject to a requirement that the properties be rented out for a minimum period of time.
“This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets,” FHFA said.
The first transaction is expected to be announced soon.
