Large banks are agreeing to give local governments and nonprofit groups the ability to buy foreclosed homes before they are sold to private investors, according to a report in the Associated Press.
The Obama administration believes local governments might benefit from acquiring these properties and using the land for redevelopment projects. Congress has provided $7 billion in money to buy the homes.
During the housing crisis many nonprofits have been outbid by speculators who are snapping up homes at foreclosure auctions.
Investors also have been buyers of homes auctioned off by Fannie Mae and Freddie Mac, though the GSEs tend to only sell off their worst REOs in bulk. Fannie and Freddie have stated that they prefer to sell REO homes to owner occupants.
The White House said the largest mortgage lenders in the country, including Bank of America Corp. and Wells Fargo & Co. have agreed to let nonprofits purchase the properties ahead of private speculators.
