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Government to unload foreclosures

By Judy Martel ·
Monday, January 9, 2012
Posted: 5 pm ET

A bulging pipeline is prompting the Obama administration to implement its plan to sell foreclosed properties in bulk to investors who will rent them out, potentially solving the problem of hundreds of thousands of vacant homes dragging down home values. According to CNBNC, the administration is close to announcing the pilot program, which is being conducted with government-owned mortgage companies Fannie Mae and Freddie Mac.

With approximately 250,000 foreclosed properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration, delays in processing have developed into a backlog that is preventing the agencies from getting the homes back on the market. Worse, there are even more potential foreclosures lurking. Lender Processing Services reports close to 2 million properties that are seriously delinquent.

Details about the government's plan to encourage private investors to buy the properties are still being worked out. They include pricing, how the public-private partnership will operate and what expertise is needed to manage large-scale property ownership. Previous attempts at enticing private investors such as hedge funds to buy homes in bulk have not appeared to be lucrative to the private sector, which is the major roadblock in moving forward with a plan. Private enterprise will invest when the numbers add up to a good deal, meaning they can justify the cost of managing hundreds of homes scattered in various locations, which is quite different than managing one building with multiple dwellings.

The goal of the program is to control supply and demand. By converting foreclosed properties into rentals, the supply of for-sale homes will diminish and that, officials hope, will stimulate the housing market.

What do you think of the government's plan to sell foreclosed properties to private investors?

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February 11, 2012 at 10:30 pm

On an added note The banks should be forced to refinance anyone in foreclosure regardless of circumstances AT THE CURRENT LOAN AMOUNT for a 2% rate for 10 years Under water or not they bought the property, need to take some responsibility and re pay the loan
or loose it...

February 11, 2012 at 10:19 pm

To Edward Shelby ?? Did you continue making payments ? I suspect NOT which is why they foreclosed.
Did your wife have a will?? I suspect you should have got a attorney and had him deal with the loan !!!!!!

Edward Shelby
February 11, 2012 at 5:50 pm

My wife purchase a home in TN. in 2003, because at that time the mortgage company told her it were cheaper for an fha loan with me on it(with her Wal-mart job).I live in the home now. After my wife death,I was tring to assume the loan, but the mortgage co.(Chase)won't speek to me because me name is not on the loan. Now the home is under foreclosure.We has two boys in collage now, this is so sad. What can we do?

January 23, 2012 at 8:46 pm

I wouldn't have a problem with this if the buyer has a deed restriction that prevents them from selling or transferring the property for at least 5 years. This would allow the market to stabilize enableing property owners to sell there homes with less foreclosures to compete with. This move would also enable some of those being foreclosed on to remain in their homes and rent. The other thing could be an allowance of 20% of the purchase could be sold per year but nothing to be sold for the first 12 months. I think this plan could work.

January 23, 2012 at 1:27 pm

In essence what they are saying is they are selling our property to foreign investors. This is a way to artificially prop the market up. Rewriting the paper so the big banks can profit even more.

If they would let the market settle, then home values would drop and more of the middle class would be able to afford a home on their current incomes.

The risk we run is foreign investors are then going the be the landlords to the American people and will rent our properties back to us.

A travesty.

January 20, 2012 at 3:51 pm

I can't stand it. Another give away to the rich, and they don't even want it, it's so badly planned. Once I thought That Obama might have had a real interest in channeling some of the wealth in this country back into the hands of a vanishing middle class,
but I made the mistake of listening to the promises, forgetting that a politician will say anything to get elected, and then once that happens show his/her true self. Obama could care less about the middle class...his interest lies in helping the poor, which is commendable,but it will not stop the rich from devouring
everything in this country, and it will not end the financial crisis faced by all but the rich. Personally, I've also come to believe that Obama is still angry and bitter about the racial history of this country, and although he has an absolute right to feel that way, I believe that anger is driving him in the way
he's running this country. I can't vote for any of the Republican candidates, my democratic ancestors would rise up and
kick me to death. But I also can't vote for Mr. Obama, not with what I keep seeing and what ideas he's come up with for solving financial problems such as this one.

John M
January 17, 2012 at 6:42 pm

The plan is to sell the homes in large blocks of 50 or more to investors who have a billion $ or more available to invest. The homes will be massively discounted from even from the currently depressed market values. The buyers will have "instant equity". In other words this will be another incredibly massive transfer of government ( tax payer’s) wealth to the super rich (1%). It’s like Qbama’s administration forgot how much people hated TARP. I can’t believe they are doing this in an election year.
If the average home is discounted $100,000, the give-away is $25 billion!

If the congress was asked to put up $25 billion to fund mini-bailouts to distressed homeowners can you imagine the uproar! However, when the give-away is to the super-rich there is silence, sadly from both sides of the aisle, Repubs and Dems. Notice this horrendous crime hasn’t been mentioned on nightly news programs or even discussed on commentary or talk radio (that I know of).

January 12, 2012 at 5:47 pm

I appreciate the possible solutions presented by the comments. However, we have to factor in who owns the property, their abilities to manage alternative solutions and business common sense. If it makes sense business-wise it would have happened already. On the political side, do you really want Uncle Sam making the business decisions? Hasn't Uncle Sam reduced flexibility and increased non-productive expenses enough already?