The implementation of a new pilot program to unload distressed properties currently being held by Fannie Mae and Freddie Mac has been so successful that the initiative's timeline will be extended.
This announcement was made by the Federal Housing Finance Agency, which oversees mortgage activity at both government-sponsored enterprises. There are currently an estimated 122,000 of these properties in Fannie's inventory, while Freddie has close to 60,000.
"Administration officials have extremely high hopes for this program," said one industry analysts, according to HousingWire. "They say this could be the most important program they've gotten off the ground since the foreclosure crisis struck."
This program was launched earlier this year in effort to cut down on the vacancy rate in a number of struggling marketplaces, including Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and Florida. Mortgage records indicate that these areas have had high levels of foreclosure activity in the wake of the housing market collapse.
Specifically, the FHFA planned to sell these distressed properties to investors in bulk at auction.
"We are currently qualifying bidders," said an FHFA spokesperson. "Qualified bidders will be notified as to the next stage of the process in due course during the evaluation of bidder qualification applications and up and through the bid date. Though we cannot speculate on your timeframes, the transaction continues to proceed as planned."
Interest in the program was far greater than the agency anticipated, and has had to extend the application deadline to the end of May. The cutoff was previously set for the middle of April. In turn, investors will now have more time to submit requests to purchase properties and subsequently convert them into affordable rental units or fix them up and resell them for a profit.
Analysts from Morgan Stanley say the program will not only help bolster property values in these areas, but could create up to 1.8 million jobs in the construction industry as a result.
Should this program continue to be successful, it could be applied to other sectors of the housing market, such as short sales, in the future. Many industry experts believe home prices are starting to approach their bottom, and further strides in working through the nation's distressed inventory could help the industry make a faster recovery.