Posted on 03/04/2013 8:14:51 PM PST by Lorianne
The U.S. federal government is making plans to sell more than 250,000 foreclosure homes at wholesale prices in bulk to a series of investor-backed firms in an effort to speed up the recovery of the housing market and artificially push home prices higher.
_________________________________________
The plan comes on the heals of a pilot program that sold homes to investor led groups in a half a dozen states, most seriously damaged by the real estate collapse. The government has made a series of efforts to aid the housing market, including efforts to refinance underwater homeowners without regard to loan to value levels, but few of the programs has actually shown much success to aid the market, which has seen home prices decline for seven years in most areas of the country until recently.
The Fannie Mae program will be implemented to sell off assets in the form of either pool sales or joint ventures. Realtors are criticizing the Federal Housing Finance Agency (FHFA) in its quiet effort to sell foreclosed homes in package deals. The REO properties, like those that have already been sold to investor groups, will have to be rented and not resold for a period of time and may not be immediately “flipped” for a profit.
A large scale sell-off of foreclosures held by Fannie Mae would reduce the number of vacant and foreclosed homes waiting to be sold throughout the country, and could also act to artificially push home values higher as a result of fewer homes listed for consumers in the general marketplace. However, it would come at an expensive price as the Federal Reserve buys home mortgages that have defaulted.
The FHFA says that an excessive inventory of distressed homes reduces home values and damages the housing market. Fannie Mae and Freddie Mac jointly completed 134,2000 foreclosure preventions in the third quarter of last year to bring the total to more than 2.5 million since the government took over both of the nation’s largest mortgage lenders in September 2008. However, more than 7-million homes have been foreclosed and millions more are expected to lose their homes in coming years.
Foreclosure actions were filed against 1,836,634 U.S. residential properties in 2012, a 3% drop from 2011 and a 36% decline since the foreclosure crisis peak at 2.9 million homes in 2010, according to RealtyTrac. The drop off in foreclosure actions, however, is still higher than at any other time in the nation’s history and is projected to continue until the U.S. economy improves. Foreclosure activity increased in 25 states during the year and dropped in the other 25 states. Foreclosures increased in New Jersey the most, 55%, and Florida, 53%, but fell by more than half in Nevada, 57%, because of a new law that went into effect barring lenders from filing foreclosure paperwork without proof of holding title to the property.
Obama cronies need only apply.
Or they could allow housing prices to find their own level. Why deliberately choose to keep housing prices high? First time homebuyers are young people who in this generatioin are struggling with student loan debt. Why inflate prices out of their reach so they have to stay home with their parents? Gee, thanks Obama.
You can bet the ChiComs will be buying a good number of them.
Cash for Clunkers comes to mind. FAIL.
How will dumping a quarter million junk properties on the market help housing values?
So banks can continue to pretend that their mortgages are worth a lot more than they really are worth. Without that lie a lot more banks would be insolvent.
I suspect they won’t be on the market for long, since they’re bundled. There are plenty of investors who are going to scoop them up. But you better have connections with the government.
What a country.
The punk POTUS and his host of court jesters are the kings of "unintended consequences". You are absolutley right. These cash for klunker homesites are going to start a dominoeing of cratering appraisal prices. i.e.... Housing Crash Part Deaux.
TARP paid all the lien holders for these bad mortgages. I’ll bet BOA and others still have liens. So, the government will pay them off AGAIN then sell them to investors. I’m sure BOA and others will be involved in financing the bundles.
I’ll admit I was never a star economist, but I still don’t get how dumping a few million houses raises home prices.
Okay. Maybe they have buyers. But what are the buyers going to do with them? Try to rent them? Let them rot? Sell them again?
They won't have to try to rent them at all. They will get a rental guarantee by converting the homes to section 8 housing, move in families of leeches, and forcing YOU to rent the house.
Leave it to the government to distort the market.
Of course.
The whole article is muddle-headed, from a reference to "foreclosure houses" to "on the heals (sp) of" to "completed foreclosure preventions", as if that's a good thing, to "The drop off in foreclosure actions, however, is still higher than ... ", though the author was trying to say "Foreclosure actions, however, are still higher ...".
For a financial blog, the author appears clueless about both Finance and English.
No wonder the Democrats can con half the population.
The buyers will buy the bundle of homes at discount, fix them up and rent them out for a tidy income. These are all cash deals. This is the quickest way the gov/banks can get rid of the huge inventory of foreclosed homes held by banks and gov agencies. The investors will get these properties via closed bids. The private purchase achieves two aims, liquidate the inventory quickly without impact on homes already listed by individual homeowners.
Like it says, these homes will not appear in general listings and for a while, at least, the supply will be reduced. Once prices rise, the corporate cronies will start trickling them into the market, similar to the way distribution is done in the stock market. It is a con game; a way of manipulating the market.
In other words, a J-school graduate...
Very unfair to the little guy like me who is looking
to buy and flip but must start small.
You think the government cares about the “little guy”? Bwahahahahahaha!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.