Feds seek ideas on renting foreclosed homes owned by government
This post has been corrected. See note at the bottom for details.
With the depressed real estate market continuing to drag down the economy, federal officials are seeking ideas from investors and others about how to rent some of the nearly 250,000 foreclosed homes owned by government-backed entities such as Fannie Mae.
Officials from the Obama administration and the Federal Housing Finance Agency, which oversees seized housing finance giants Fannie Mae and Freddie Mac, said they hoped for innovative solutions to addressing part of the severe oversupply of single-family homes.
There are about 248,000 foreclosed homes now owned by Fannie, Freddie and the Federal Housing Administration, with thousands more in the pipeline. Selling those homes is a key to stabilizing housing prices.
"Millions of families nationwide have seen their home values impacted as their neighbors' homes fall into foreclosure or become abandoned," said Housing and Urban Development Secretary Shaun Donovan. "At the same time, with half of all renters spending more than a third of their income on housing and a quarter spending more than half, we have to find and promote new ways to alleviate the strain on the affordable rental market."
One idea could be to create pools of foreclosed properties that would be sold in bulk to private investors, who would then rent them out, helping reduce taxpayer losses on the bailouts of Fannie and Freddie. Another idea could be for investors to buy homes and then rent them on a rent-to-own basis.
Strategies would be tailored to the needs of different areas of the country, with a goal of helping increase affordable housing, government officials said.
Action on the issue might take a while. HUD and the FHFA announced a "request for information" that is open to all interested parties. Those comments are due by Sept. 15. The FHFA and HUD are to review the ideas and then could issue a more formal request for specific proposals.
Government officials said they are seeking longer-term proposals that would supplement existing programs designed to stabilize the housing market. Among them is the Obama administration's "Hardest Hit Fund" which tries to help homeowners avoid foreclosures in California and other states where the housing market is the worst.
For the record, 1:05 p.m. Aug. 10: An earlier version of this post said the government-backed entities owned nearly 100,000 foreclosed homes. That is the figure for foreclosed homes listed for sale or that have offers but have not closed. The total number of foreclosed homes owned by government-backed entities is about 248,000.
-- Jim Puzzanghera in Washington
Photo: Homes for sale in Palmdale in May. Credit: Michael Robinson Chavez /Los Angeles Times