What To Do with Real Estate Owned Properties (Part 2)

The U.S. Federal Housing Finance Agency (FHFA) reported that 4,000 responded to the Request for Information of FHFA, the Department of Housing and Urban Development (HUD), and Department of the Treasury regarding the question on what to do with the single-family real estate owned (REO) properties held by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).

According to FHFA, the Request for Information by the three federal agencies was aimed to find options for maximizing the value to taxpayers and increase private investment in the housing market, including the options that support rental and affordable housing needs.

The 4,000 respondents came from the Academics, Asset Management Companies, Commercial and Investment Banks, Data and Analytics Firms, Developers, Housing Advocacy Groups, Nonprofits, Private Equity Firms, Private Individuals,  Property Managers, Real Estate Firms, and Trade Groups.

Of the 4,000 respondents, FHFA said, only 10 percent or 800 respondents fully responded to the questions posed in the Request for Information.

Based on the report of FHFA, here are the main proposals of the respondents regarding the query on what to do with the real estate owned properties held by Fannie Mae, Freddie Mac, and FHA:

1. Respondents supported the joint venture partnerships, outright sales, and auction methods used by the Federal Deposit Insurance Corporation the Resolution Trust Corporation;

2. Other respondents proposed that FHFA adopts a program that is similar to the Public-Private Investment Partnership Program of the Treasury Department – a program that includes risk sharing with the U.S. government, involving the use of Treasury financing, along with private equity, to purchase troubled loans from banks;

3. Some respondents recommended the use of Real Estate Investment Trust (REIT) structures; that is, giving investors unique tax advantages, support longer term investment capital, and require controls to prevent practices such as property “flipping”; and

4. Most respondents proposed disposition of single-family real estate owned properties by renting the properties for a period of time. Many also recommended offering tenants an opportunity to purchase the properties, otherwise known as the rent-t0-own scheme.

Whether you are a first time buyer, first time seller, empty nester, thinking about selling or buying a home, do contact the Guldi Real Estate Group. In Southern Maryland, the Guldi Real Estate Group is the number one real estate team.