The Federal Housing Finance Agency has a "healthy skepticism" about whether its REO bulk sale initiative will work, according to Meg Burns who's in charge of the sale.
And she told a Hispanic Realtors group that the GSE regulator will not complete a sale if the "pricing comes in too low."
Many Realtors are concerned that bulk sales will take REO properties out of their hands with investors swooping in as landlords, keeping these units off the market. This means Realtors cannot sell the units and earn sales commissions.
However, roughly 80% of the 2,490 REO properties being auctioned off by Fannie Mae in its first bulk deal are occupied, as opposed to vacant. Occupied properties are the hardest to sell. There is strong demand for vacant properties, agents have reported.
Burns told a National Association of Hispanic Real Estate Professionals meeting Friday that FHFA/Fannie chose predominantly occupied properties in its first REO bulk sale because it would be less disruptive to communities.
"It is a way to test the waters without really creating further downward pressure on these markets," Burns said.
FHFA is currently reviewing applications by investors who want to participate in the first sale. It will take a few more weeks to approve eligible bidders.
The GSE regulator will "scrutinize" what the investor/asset manager applicant has done in the various communities they operate in, Burns told the Realtors. The agency will decide whether these applicants are "sensitive to the needs of local residents and partnered with local organizations," she said.
