Plans are being made by the federal U.S. government to facilitate the sale of over 250,000 homes that have been foreclosed in bulk at wholesale costs to firms backed by investors in attempt to hurry the housing market’s recovery and increase the prices of homes.
A certain pilot program has houses sold to groups led by investors in 6 states that were most affected by the collapse of the real estate market. Several efforts have been made to facilitate the housing market’s recovery by the government, such as attempting to have underwater homeowners refinanced, loan value levels aside. Unfortunately, few of these plans have been successful and the prices of homes have continued to decline in the U.S.
The program by Fannie May intends to sell assets through joint ventures and pool states. The FHFA (Federal Housing Finance Agency) is being criticized by realtors for its efforts to package deal foreclosed homes. REO properties, such as those sold to groups of investors already, are going to need to be rented out and will not be able to be sold again for awhile.
Fannie Mar’s mass foreclosure sales would ultimately reduce vacancies and foreclosures of homes nationwide and may also raise the values of homes by decreasing the availability of listings. However, the price would be high considering defaulted home mortgages are purchased by the Federal Reserve.
According to the FHFA, an distressed homes in abundance brings about declining values of homes and as a result, the real estate market is damaged. Freddie Mac and Fannie Mae together prevented 134,2000 foreclosures in last year’s third quarter alone, bringing their grand total since 2008 to over 2.5 million. Still, over 7 million houses have experienced foreclosure and numbers in the millions of more individuals are predicted to do the same in the years to come.
In 2012, 1,836,634 foreclosure actions had been filed against residential properties in the U.S., dropping 3% from 2011 and declining 36% since the peak of the foreclosure crisis in 2010, at 2.9 million houses. The foreclosure actions drop off remains higher than anything the nation has ever experienced and this is expected to proceed until improvement in the U.S. economy is seen. The biggest increase in foreclosure was seen in New Jersey at 55%, followed by Florida at 53% in the 25 states that saw an increase, but 25 states saw a decline in foreclosure activity, the greatest being Nevada, where it fell by 57%, due to the new law passed preventing lenders from being able to file paperwork for foreclosure without being able to prove they have the property’s holding title.
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