First REO-to-Rental Transactions Ready to Close

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MORTGAGE EXPERT
7 · 03 · 12

The first transactions in a pilot program to convert foreclosed properties into rental properties are set to close.

The program was first proposed in August 2011 by the Department of Housing and Urban Development, the Department of the Treasury and the Federal Housing Finance Agency.

The proposal was in response to 4,000 comments following a solicitation of ideas about how to unload REO properties owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.

Targeted properties are located in the hardest-hit metropolitan areas.

In a pilot program launched in February, pre-qualified investors submitted applications to purchase pools of distressed Fannie Mae assets that included nearly 2,500 properties. Almost 30 percent of the properties are located in Florida, while nearly a quarter are in Southern California and 21 percent are in Atlanta.

The markets response to the pilot program has been “robust,” FHFA said in an announcement Tuesday.

Bidders were considered based on factors including their financial strength, asset management experience and property management expertise. FHFA also considered their experience in the geographic area.

Following a “rigorous evaluation process,” winning bidders were selected and the transactions are expected to close early in this quarter.

“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,” FHFA Acting Director Edward DeMarco said in the statement.

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