In a letter to investors obtained by American Banker, Freddie Mac informed real estate investors what while “we want to work with investors in our market area…we are not considering any…significant discount pricing [on REO properties].” The GSE noted that most real estate investors who want to purchase REO properties in bulk are “interested in purchasing at 40-60 cents on the dollar below current list price.” The GSE is not interested in selling at these rates. In June 2011, Freddie Mac held 60,569 REO properties, and although the Obama administration has floated the idea of selling these properties to investors, critics fear that the result of selling at a discount would create more negative pressure on home values. These critics, included the National Association of Realtors (NAR) and Radar Logic, both of which warned that home values would fall and taxpayers would suffer while the “investors” (actually large financial institutions), would be able to buy property at substantial discounts that would not, ultimately, help get owner occupants into homes.
NAR advocated “expanding financing opportunities, bolstering loan modifications and short sale efforts and enhancing the efficient disposition of [REO] properties,” according to a statement by NAR president Ron Phipps. Phipps added that individual sales should be incentivized rather than bulk sales and also suggested the formation of a lease-to-own program administered by “local investors or nonprofits that are familiar with the specific needs of their local markets.”
Do you agree that Freddie Mac should not sell in bulk at a discount?
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