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Real Estate Owned (REO)

 
FHFA is exploring new approaches to the disposition of foreclosed properties (real estate owned, or REO) owned by Fannie Mae and Freddie Mac.  The Fannie Mae’s and Freddie Mac's REO portfolios are now stable and their individual retail sales are achieving close to fair market values for the properties.

 

About

The REO Initiative allows qualified investors to purchase pools of foreclosed properties with the requirement to rent the purchased properties for a specified number of years.  This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets.  Pre-qualification ensures investors will have the financial capacity and operational expertise to manage properties in a way that is conducive to the stabilization of communities hard hit by the housing downturn.

 

Pilot Initiative

In late February 2012, FHFA announced the REO-to-Rental Pilot Initiative Targeted to Hardest-Hit Areas), a highly targeted pilot program with Fannie Mae, to test an asset disposition model that could complement the existing disposition strategies for REO by Fannie Mae and Freddie Mac.

The goals of this pilot, the REO to Rental Initiative, were to determine if a bulk sale model concept would generate private investment in single-family rental housing efficiently and effectively to stabilize local markets.

FHFA’s objectives were to understand the market for these assets across three dimensions:

  • Private Capital—Gauge investor interest in a new asset class, scattered-site single-family rental housing, as measured by the price investors are willing to pay for a traditionally high-value commodity hampered by oversupply.

  • Economies of Scale—Determine whether the disposition of properties in bulk, instead of one-by-one, presents an opportunity for well-capitalized investors to partner with regional and local property management companies and other community-based organizations to create appropriate economies of scale and lead to civic-minded approaches that could stabilize and improve market conditions.

  • ​Replicability—Assess whether the model can be efficiently replicated to make it a worthwhile addition to the standard retail and small-bulk sales strategies in place at Fannie Mae and Freddie Mac and other financial institutions with large inventories of properties to sell.

Winning bidders acquired seven subpools offered for sale.  The REO pilot transaction provided a proof-of concept and model for future structured sales that may be used by the Enterprises or private institutions.

FHFA Announces Next Steps in REO Pilot Program (July 3, 2012 Release)
FHFA Announces First Winning Bidder in REO Pilot Initiative (September 10, 2012 Release)
FHFA Announces Winning Investor in Chicago REO Pilot Initiative (October 2, 2012 Release)
FHFA Statement on REO Pilot Transactions(November 1, 2012 Statement)
Highlights of the REO Pilot Transactions (November 29, 2012)

 

Working Together to Find Possible Relief for Local Housing Markets

To launch its REO Initiative, FHFA issued a Request for Information: Enterprise/FHA REO Asset Disposition (August 10, 2011) to solicit ideas for approaches to help current and future disposition of REOs, improve loss recoveries compared to individual retail REO sales, help stabilize neighborhoods and local home values, and where feasible and appropriate, expand the supply of rental housing.

FHFA, Treasury, HUD Seek Input on Disposition of Real Estate Owned Properties (August 8, 2011 News Release)FHFA developed the request in consultation with the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development, taking into consideration broad government interest in REO disposition, including the disposition of properties owned by the Federal Housing Administration (FHA).

Read responses: FHFA REO Initiative: RFI Response Summary (November 30, 2011)

  

For Prospective Investors

If you are a prospective investor interested in receiving information regarding structured sales composed of Fannie Mae single family real estate owned assets, you will be required to meet certain minimum criteria to be Pre-Qualified.  Once you are Pre-Qualified, you will be eligible to receive information regarding an actual proposed transaction if and when such information becomes available.

Investor Pre-Qualification Process 
(Note:  Submission Instructions including address for submission are on page 9 of form)

FHFA Announces Pilot REO Property Sales in Hardest-Hit Areas; Next Step for Investors Interested in Fannie Mae Foreclosed Properties (February 27, 2012 Release)

Bidder Qualification Package (Application):  HomePath Link to the Public Version of Fannie Mae SFR REO 2012-1
Fannie Mae HomePath Structured Sales Webpage (see page for FAQs)

 

Supplemental Data

Supplemental REO Data (XLS) (as of March 5, 2012)

Supplemental REO Data (XLS) (as of December 26, 2011)

Supplemental REO Data (XLS) (as of July 18, 2011)
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