Just three weeks after word leaked that the Treasury Department, in conjunction with the Federal Housing Finance Agency (FHFA), would be launching an REO conversion program to sell its 250,000 distressed properties to investors as rentals, the FHFA has already begun pre-qualifying rounds for investors.
Under the new plan, participating investors may pre-qualify to establish their eligibility to bid on transactions in both the pilot phase of the program and all subsequent phases.
Pre-qualification will require pilot investors to meet certain minimum criteria, including having the necessary finances to purchase the properties, possessing a sufficient base of experience and knowledge to handle the properties and signing a confidentiality agreement.
Edward J. DeMarco, the FHFA’s acting director, said in the agency’s press release that the conversion plan is an invaluable step for the housing market that is grounded in collaboration.
“This is an important step toward increasing private investment in foreclosed properties to
maximize value and stabilize communities,” DeMarco said. “I am grateful for the collaborative effort by the many stakeholders, including investors, nonprofit organizations, and state and local government officials, who have worked together on this initiative.”
The initiative will allow qualified investors to purchase pools of foreclosed properties under the requirement that they rent the purchased properties for a specified number of years. The ultimate goal of the plan is two-fold: to meet the surging demand for rentals, and, most importantly, to provide relief to housing communities wrecked by distressed home values.
The pilot phase will focus on selling pools of various types of assets, including rental properties, vacant properties and non-performing loans – all within the hardest-hit areas and close to market value. The first transaction will be announced in the near-term.
Developed in conjunction with the Treasury Department, Department of Housing and Urban Development, Federal Deposit Insurance Corporation, Federal Reserve, Fannie Mae and Freddie Mac, the initiative was also inspired by meetings with stakeholders and a review of more than 4,000 responses to a Request for Information (RFI) seeking input on options for selling single-family REO properties held by Fannie Mae, Freddie Mac, and the Federal Housing Administration.