Mortgage giant Federal National Mortgage Association or Fannie Mae is facing the daunting task of taking over, rehabilitating and putting on foreclosure listings for sale about 65,000 repo homes.
Fannie Mae, which owns or guarantees a third of home loans in the country, has developed a strategy to put all foreclosed homes on foreclosure listings and sell them individually.
However, the strategy could be time consuming and cost intensive as most properties repossessed by Fannie Mae and put on foreclosure listings for sale are either damaged by vandals when former homeowners move out or been left in a state of disrepair.
According to vice president of Fannie Mae’s foreclosure sales Gabrielle Harrison the mortgage company spends nearly $10,000 to fix each property before it is put on foreclosure listings for sale.
She said that the company has to make an assessment to determine the price of the property and handle the sale, adding that it usually takes 90 days to find a buyer for a foreclosed home.
Fannie Mae is facing the challenge of making a quick sale without undercutting prices of homes on foreclosure listings.
Harrison explained that the company has to identify the fair market price for each property, which she described is like nailing down a target that is moving.
Sales representatives of Fannie Mae access foreclosure listings of properties for sale and assign local brokers to manage the sale. They review photographs of foreclosure properties, assess those in need of renovations, find local vendors who will fix the houses and lastly, review buyers’ offers and counteroffers.
Meanwhile, Pat Mahoney, head of the valuation team at Fannie Mae, said that it is difficult to estimate prices in the housing market that is fast deteriorating. He cited several states where foreclosure is becoming uncontrollable, including Florida, Nevada and Arizona.
On the other hand, Fannie Mae has established a rental program which allows tenants who are living in distressed properties to remain in their homes with the mortgage company as their landlord.
Currently, Fannie Mae has about 1,800 tenants who are living in repo homes. It has also secured about 20 signed leases.
John Bauer, director of Fannie Mae’s rental operations, said that having tenants contribute to the stabilization of neighborhoods and tend to raise the prices of foreclosed homes.
However, all the properties in foreclosure listings, whether occupied or not, must be sold eventually.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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