OfflineThe White House, in conjunction with federal regulators are putting forth the idea of a pilot program early in 2012 to sell off foreclosures in bulk to investors. The program would sell off foreclosed homes owned by Fannie Mae and Freddie Mac in bulk for conversion to rentals.
There is pressure for the government to do more, especially when many see a surge in foreclosures in 2012 due to banks getting their procedures back on track after the robo-signing scandal. Inventories are already very high, and a new surge will further pressure prices downward. This trend is one that many fear will increase the number of “strategic defaults,” or those walking away from homes they can afford because they’re far underwater on their mortgages.
The government says that this pilot program will start early in 2012, but they haven’t released details. The program will only benefit very large investors, institutions, and holding companies because the logistics of managing hundreds or thousands of single family homes over a large area are much more complex than apartments or high rise structures in one location.
One official close to the plan has stated that investors would need one billion plus in assets to take full advantage of the program for packages of 50 to 500 properties per deal. The government has stated that there is a goal to involve smaller local and institutional investors as well. Converting this many homes to rental properties and removing them from the foreclosure inventory should begin to restore some confidence in a cessation in the home price slide.
Some critics, while they believe this would help to stabilize prices, are concerned that this program is one that will reward big campaign contributors and those in favor with the administration, subsidizing their purchase of thousands of properties and moving them to highly profitable rental status.
I understand that it would probably take the creation of another bureaucratic agency(not that I want another one. That's just probably what the government will do.) to handle all the paperwork and whatever else is involved, to sell to anyone in the US. But wouldn't the bulk sell off be going to the other extreme? First the government wanted to sell only to people who would live in the homes permanently, which was a limited number of people because people couldn't get loans. Now they want to sell to people with at least a billion dollars in cash, which is still a limited segment of the population. Doesn't seem to make sense. The best thing to do would be to sell to the best cash offer or best offer of terms, right? For the homes that can't be sold because of condition, contamination, or other problems could they be torn down and sold for the worth of the land?
I hope as many DG investors as possible will take part in this opportunity.
RENinja
"Remember, success is a journey, not a destination.
Have faith in your ability."
Bruce Lee
My question would be how will these sell offs affect prices in the market place, since we are not seeing a surge. There is massive inventory. How does the government see this sell off as a win..and or the effect it will have on the banks approach to real estate.
dlaw
"Your good is better & your better is blessed!!"