by Broderick Perkins
(2/10/2012) Erate Exclusive - A more organized modern-day version of late
19th Century land rushes in America is underway with properties already
occupying the land.
The Federal Housing Finance
Administration (FHFA) has opened for business a new program to unload
of an estimated 200,000 Fannie Mae- and Freddie Mac-owned homes, beginning
with an investor prequalification process.
Targeting hardest hit metropolitan areas, FHFA's "Real
Estate Owned (REO) Initiative (ROI)" allows qualified investors to
purchase pools of foreclosed properties, provided they convert them to
rentals for a set number of years or help facilitate flips to
The unprecedented, long-planned, ROI program is designed to shrink
the inventories of distressed properties that are dragging down home prices;
reduce Fannie Mae's and Freddie Mac's carrying costs; rehabilitate
distressed properties; provide affordable housing for markets most in need
and help stabilize hard-hit communities weighed down by foreclosures that represent as much as 50 percent
of the housing stock.
Investors, who are often better at moving distressed
properties than banks, have an opportunity to realize a sizable return on
The prequalification period is designed to ensure investors will have the
financial wherewithal and operational expertise to manage properties in a
way that is most conducive to shoring up hard hit communities.
"This is an important step toward increasing private investment in
foreclosed properties to maximize value and stabilize communities," said
FHFA acting director Edward J. DeMarco.
"I am grateful for the collaborative effort by the many stakeholders
including investors, nonprofit organizations, and state and local government
officials, who have worked together on this Initiative," he added.
Investors can range from individuals who earn more than $200,000 to
multi-million and multi-billion dollar individuals, partnerships,
non-profits, banks, trusts and corporations, provided they qualify.
FHFA is also looking for ways to improve REO sales, at market value, to
homeowners and small investors. ROI wants to see programs developed for
previous homeowners to rent properties or for current renters to become
owners under lease-to-own deals.
Prequalification requires investors meet certain minimum criteria
Financial ability to acquire and manage the assets.
Sufficient experience and knowledge in the financial and business
matters and risks associated with investment properties.
Agreement to keep certain information about the REO and related
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