A recent announcement from Freddie Mac said it will start using a new method in which to valuate real estate-owned properties it acquires this during the course of 2012, HousingWire reports.
In recent years, the mortgage giant acknowledges it had difficulties with REO pricing, but with the introduction of this new model, Freddie hopes to curb any doubts the company will be able to competitively price these distressed properties to sell.
"We're doing this to minimize dysfunction in the market place, by hopefully eliminating broker-appraiser coercion, and the stigma of severely undervalued REO," said Freddie Mac senior vice president of single-family servicing Tracy Mooney, according to the news source.
Properly valuating these properties is a major concern for the GSE right now, as real estate data from the third quarter indicates the company acquired nearly 24,300 REO properties during the three-month period, while unloading approximately 25,000 units. While the sales rate did outperform the acquisition rate, it was fund that there were still an estimated 60,000 distressed properties in the company's inventory.
Freddie introduced the new valuation process in a pilot program in 2011, which proved to be a major success. Analysts say that by mid-2012, the system will hopefully be applied to short sales as well.