47% Of Fannie Mae Real Estate Owned Unable To Reach Market

Roughly 47% of Fannie Mae's inventory of foreclosed homes are currently unable to reach the market. As real estate agents continue to push for an REO wave to be released, Fannie says the backlog is caused by lengthy redemption periods, new rental programs and a slow eviction process.

Only half of the previously foreclosed homes owned by Fannie Mae are either on the market or being prepared for sale. The remaining properties are currently locked away in some step of the foreclosure system.

The National Association of Realtors said in its existing home sales report Wednesday that its officials were pressuring government agencies to release more of their REO in markets short of inventory.

Many market participants long claimed the government – including Fannie, Freddie Mac and the Department of Housing and Urban Development – are deliberately holding these homes off the market in order to get more for them when home prices recover.

Fannie disclosed for the first time this year where these properties are in the lengthy and complicated REO process. In its second quarter financial filing, the government-sponsored enterprise said 23% of its more than 109,000 repossessed homes are currently available for sale.

That's down from 28% at the end of last year.

An offer has been accepted on another 19%, and 11% have an appraisal pending, Fannie said.

But 47% of its inventory is unable to be marketed.

Roughly 14% of Fannie's entire REO inventory is redemption status, meaning the time frame borrowers and second-lien holders can redeem the property under various state laws. The timelines vary and have come under much change across the country. In Michigan, for example, lawmakers passed a bill last year to extend the redemption period to as much as one year in some cases. The bill was referred back to a state committee in March.

Fannie said another 13% of its properties are still occupied by the borrower. The eviction process just hadn't been completed.

Interestingly, 8% of its inventory – slightly less than 9,000 homes – are being rented as part of its piloted Tenant in Place or Deed for Lease programs, where the home is rented back to the borrower.

Its other piloted program to sell roughly 2,500 homes to investors, who were approved in recent months to rent the properties out, will close at some point in the third quarter.

"The properties we own are either on the market or in the process of being brought to market. Fannie Mae's goal is to sell HomePath properties at market competitive rates as quickly as we can so that neighborhoods stabilize and recover," a Fannie spokesman said.

In its financial filing, Fannie showed it's taking fewer losses on its REO sales. The GSE recovered an average 65% of the unpaid principal balance from REO sales in the second quarter, up from a low of 59% at the beginning of last year.

But even this metric varies widely across the country. It was able to recover an average 78% of the unpaid principal through REO sales in Texas but only 50% of the original mortgage balance in Nevada sales.

Home prices began to steadily improve in 2012, pushing profits up for the GSE. It signaled to investors that the major hurdle holding back REO sales isn't its own management of the properties but of mortgage servicer difficulties, specifically at the five largest banks.

Fannie sold only 5,000 more REO than the 43,700 homes acquired in the second quarter.

"We continue to manage our REO inventory to minimize costs and maximize sales proceeds," Fannie said in its filing. "However, as we are unable to market and sell a higher portion of our inventory, the pace at which we can dispose of our properties slows, resulting in higher foreclosed property expenses related to costs associated with ensuring that the property is vacant and costs of maintaining the property."

SOURCE: HOUSINGWIRE

Political/economic problem/conflict:

The troubled loans are for the most part the low income/upside down buyers who were not qualified in the first place to buy the home they actually bought.

Many of those homes were rented with Section 8 leases and those leases must be completed before a foreclosure can be effective to clear the inventory.

Protracted litigation and bankruptcies (some of the repetitive) extend the occupation of the home for years ..... (with appeals sometimes) ... and

during the rent-free, no payments occupations the condition of the homes deteriorate to a disgusting level .... buyers who look at them don't even want to go inside ... I have seen some with mouse droppings all over the kitchen counters, unflushed toilets full of aging sewer (no water service), pet ruined carpeting, windows and doors kicked in, stair cases that are broken and unsafe to use, roof leaks that have damaged ceilings and walls, and wiring and essential applicances .. ac and water heaters .. stolen or missing. Not to mention yards and landscaping destroyed from lack of watering and care or stolen, as for plants and materials.

and the the new lender/assignee of the loan have Federal guaranties behind the loans for any deficiency, so they lack an incentive to agree to a "short sale" to clear the loan ... because the lender is then compromising the loan and will not get reimbursed for the loss.

When people report the housing market is better ... or improving .. it does not take into account the homes that are "off the market" and will be flooding the market when the dam is opened. It's a numbers game ... often padded with stats on "refinancing" that are not "home purchases" in the first place. Ask your honest agent.

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Many of those homes were rented with Section 8 leases and those leases must be completed before a foreclosure can be effective to clear the inventory.

Protracted litigation and bankruptcies (some of the repetitive) extend the occupation of the home for years ..... (with appeals sometimes) ... and

during the rent-free, no payments occupations the condition of the homes deteriorate to astats on "refinancing" that are not "home purchases" in the first place. . Originally Posted by LexusLover

Link please.

I have seen many house in my hood sit vacant and deteriorating due to the inability of getting them on the market. When they do finally hit the market they are snatched up by investors quickly. Some it ppears are buying site unseen. I personally do not invest that way and need to see what my addicional investg ment cost will be to bring the property up to a better level.
It would not surprise me to find out that there are deals made before the house is officially put on the market.

It would not surprise me to find out that there are deals made before the house is officially put on the market. Originally Posted by The2Dogs

There are some allegations that good deals are snatched by lenders' employees through the trustees who use "agents" to make the bids then flip them to the employees ... the foreclosure lists are bought, properties reviewed, and bid on accordingly.

Link please. Originally Posted by WTF

Link to what?

http://www.har.com/
http://www.realtytrac.com/mapsearch/...eclosures.html
http://www.auction.com/Texas/All-auc...FZGPPAodxSkA1Q
http://txhud.com/homes/texas-foreclosures

Enjoy!

Some of the local problems increased when the Katrina evacuees started buying properties here with "relocation" packages with grants for downpayments, less than interest only loans with a balloon in 5 years, and the required purchase of existing HUD vacant foreclosures ... when they got their insurance proceeds for their lost homes in Louisiana they did not put the money down on their "new home" here as was intended, they pisssed it off on fancy cars, vacations, and overpriced furnishings.

Then the balloon hit and they didn't have jobs (living off the insurance) to qualify for a refinance or money to pay down for the refinance caused they had pissed off the money from the insurance proceeds. They were foreclosed upon and many simply refused to move out until the deputies came to remove them. In the meantime the houses were trashed.

Please note, WTF, I wrote:

"I have seen some with mouse droppings all over the kitchen counters, unflushed toilets full of aging sewer (no water service), pet ruined carpeting, windows and doors kicked in, stair cases that are broken and unsafe to use, roof leaks that have damaged ceilings and walls, and wiring and essential applicances .. ac and water heaters .. stolen or missing. Not to mention yards and landscaping destroyed from lack of watering and care or stolen, as for plants and materials."

Please note, WTF, I wrote:

"I have seen some with mouse droppings all over the kitchen counters, unflushed toilets full of aging sewer (no water service), pet ruined carpeting, windows and doors kicked in, stair cases that are broken and unsafe to use, roof leaks that have damaged ceilings and walls, and wiring and essential applicances .. ac and water heaters .. stolen or missing. Not to mention yards and landscaping destroyed from lack of watering and care or stolen, as for plants and materials." Originally Posted by LexusLover

You've been to WTF's house?