Fannie Selling More REO Than It Is Taking In
Washington-With home foreclosure rates continuing to rise, Fannie Mae is going the extra mile to sell its inventory of real estate-owned properties as fast as it can.
Fannie acquired 57,470 single-family foreclosed properties during the first half and sold 58,400 - some of it with GSE financing. "We sold more properties than we acquired during the first six months of this year," said Fannie spokesman Amy Bonitatibus.
But the mortgage giant still had an inventory of 62,400 REO homes as of June 30. (More up-to-date figures will be available in a few weeks when Fannie files its third-quarter financial results.)
The government-sponsored enterprise revamped its HomePath REO sales program in January and started providing special financing to homebuyers with only 3% down. Mortgage insurance is not required.
Financing also is available to investors. However, REO listings have to be on the market for at least 15 days before Fannie will accept an offer from a non-owner-occupied investor. Financing for renovations on certain properties is available, too.
Earlier this year, only a few lenders were participating in the HomePath financing program but six months later the number of participating mortgage bankers has grown to 15.
"We are obviously doing everything we can to sell REO at a competitive price - in order to stabilize neighborhoods - as quickly as we can," said the Fannie spokeswoman. "I think HomePath is definitely helping us achieve that."
A year ago, Fannie acquired 44,100 REO during the first six months of 2008 and sold 23,600. The GSE currently has 40,000 properties listed on its HomePath website which includes information about the home, the listing broker and whether renovation financing is available.
Freddie Mac started its REO sales unit HomeSteps back in the early 1990s but currently does not offer financing. However, it gives buyers a two-year warranty on electrical, plumbing, heating, air conditioning systems and major appliances. And for a limited time only, Freddie will put 3.5% of the sales price toward closing costs. To take advantage of this special offer, potential buyers have to submit a bid by Oct. 30.
"Every home shopper should know there are only [a few] days left to save potentially thousands of dollars in transaction costs when they buy a HomeSteps home," said Freddie vice president Chris Bowden. Mr. Bowden runs the REO sales unit, which is based in Dallas.
As of Aug. 31 Freddie had sold 40,000 REO units year-to-date. It currently has 13,000 homes on the market. During the first six months of this year, Freddie acquired 36,000 REO homes and sold 30,600. The GSE ended the second quarter with an inventory of 34,700.