Foreclosed homes HUD is increasing in numbers every day, leaving lenders with more abandoned and vacant properties in their inventories. The increase is particularly felt by government-sponsored enterprises Federal Home Loan Mortgage Corp. or Freddie Mac and Federal National Mortgage Association or Fannie Mae.
According to RealtyTrac’s data and regulatory filings of both companies, Fannie Mae and Freddie Mac are each owner of more than one foreclosed properties in every nine. The data also showed that both companies almost doubled the number of foreclosed homes in their inventories in 2008.
Fannie Mae owns 64,000 single family houses while Freddie Mac is the owner of 29,000 repossessed homes. The total number of foreclosed properties by both Freddie Mac and Fannie Mae is said to be similar in the number of households in Madison, Wisconsin.
Furthermore, both Fannie Mae and Freddie Mac expect that their holdings of foreclosure properties would rise significantly following the lifting of moratoriums.
RealtyTrac Vice President Rick Sharga said that it is expected that Fannie Mae and Freddie Mac will foreclosed on more houses, even if they have only substantial subprime loan holdings, because the projected second attack of foreclosures, driven by unemployment, include loan types that both entities specialize in which are fixed, 30-year prime conforming loans.
In anticipation of the increase in foreclosure activity, Fannie Mae and Freddie Mac have launched programs to help distressed homeowners stay in their homes. Under the programs, troubled homeowners will be allowed to rent their distressed properties at market rates.
Although both programs are similar in their missions, that to help distressed homeowners and to reduce the number of vacant properties, there are slight differences in the lease terms. Freddie Mac will allow previous owners or tenants to stay in their homes. On its part, Fannie Mae will allow owners to become tenants but the foreclosed properties will not be taken out of the market.
According to Fannie Mae, an estimated 1,800 housing units are eligible for its program.
Meanwhile, industry experts said that one consequence of the Fannie Mae and Freddie Mac’s rental programs could be a reduction in the number of properties in foreclosure listings. Still, Sharga believed that home prices would benefit more if lenders released their foreclosed homes HUD in a controlled and regulated manner.
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