The review of individual real estate investors hoping to purchase distressed properties in the inventories of Fannie Mae and Freddie Mac is set to conclude within the next few weeks, according to the Federal Housing Finance Agency.
The FHFA, which oversees mortgage activity at both government-sponsored enterprises, previously introduced an initiative to streamline the sale of REO homes in their inventories to investors, who would then fix them up and resell them for a profit or convert them into affordable rental units.
Regionally, a majority of the 2,500 homes that are part of the pilot program are located in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and Florida. Real estate data indicates that these are all areas that have had weak housing performances in the wake of the market collapse.
"There is an expectation that local construction and repair companies will be engaged due to their familiarity with state and local building codes," said FHFA senior associate director for housing and regulatory policy Meg Burns. "That local property management firms will have knowledge of the potential tenant population in the area and the best means of marketing to these citizens, and that community-based nonprofits may provide supportive services to the residents."
Should this program prove to be successful, it could be applied to other distressed properties, including short sales, in the near future.