Range of Ideas Sought, Including Transition to Rental
Washington, DC — The Federal Housing Finance Agency (FHFA), in consultation with the U.S. Department of the Treasury and HUD, has announced a Request For Information–a formal request for input on new options for moving the inventory of single-family REO properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration.
The objective is to gain ideas that could address current and future REO inventory.
These agencies need to explore alternatives for maximizing value to taxpayers and increasing private investment in the housing market, including approaches that support rental and affordable housing needs.
Individual REO properties will still be offered for sale, but the agencies seek input on possible pooling of REO properties in situations where such pooling, combined with private management, may reduce credit losses and help stabilize neighborhoods and home values.
“As we continue moving forward on housing finance reform, it’s critical that we support the process of repair and recovery in the housing market,” said Treasury Secretary Tim Geithner. “Exploring new options for selling these foreclosed properties will help expand access to affordable rental housing, promote private investment in local housing markets, and support neighborhood and home price stability.”
“Millions of families nationwide have seen their home values impacted as their neighbors’ homes fall into foreclosure or become abandoned,” said HUD Secretary Shaun Donovan. “At the same time, with half of all renters spending more than a third of their income on housing and a quarter spending more than half, we have to find and promote new ways to alleviate the strain on the affordable rental market. Taking steps to encourage private investment in REO properties and transition them into productive use will help stabilize neighborhoods and home values at a critical time for our economy.”
The request calls for approaches that reduce the REO portfolios in a cost-effective manner; address property repair and rehabilitation needs; respond to economic and real estate conditions in specific geographies; suggest analytic approaches to determine the appropriate disposition strategy for individual properties, whether sale, rental, or, in certain instances, demolition.
FHFA, Treasury and HUD anticipate respondents may best address these objectives through REO to rental structures, but respondents are encouraged to propose strategies they believe best accomplish the objectives. Proposed strategies, transactions, and venture structures may also include:
programs for previous homeowners to rent properties or for current renters to become owners (lease-to-own);
strategies through which REO assets could be used to support markets with a strong demand for rental units and a substantial volume of REO;
a mechanism for private owners of REO inventory to eventually participate in the transactions; and
support for affordable housing.
To view the Request for Information document, click here.
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