Freddie Mac sent a letter to investors regarding bulk sales of foreclosed homes. The GSE offers investors the opportunity to purchase properties in bulk from HomeSteps a division of Freddie Mac that offers sales of the GSE's foreclosed properties. However, thus far, investors have generally expected a significant discount to accompany a bulk sale.
According to the letter to investors obtained by American Banker, Freddie Mac does not intend to offer such discounts.
We want to work with investors in our market areas; however, we have found most are interested in purchasing at 40 to 60 cents on the dollar below current list price. We are not considering any such significant discount pricing, Freddie Mac stated in its letter to investors.
As of June, Freddie Mac held 60,569 REO properties.
In August, the Obama administration sent out a request for information (RFI), asking for ideas that would rid Fannie Mae, Freddie Mac, and the Federal Housing Administration of some of their inventory of foreclosed homes. The deadline for proposals was Thursday.
The RFI specifically mentioned the prospect of selling pools of loans to investors to rent on the market, thus absorbing some of the inventory without negatively impacting prices in the broader market.
However, some have voiced concerns that such a plan would bear negative pressure on the market if the properties were sold at a discount to investors.
NAR responded to the RFI, expressing concerns that bulk sales would create larger losses for taxpayers than other available options. NAR stated that the availability of bulk sales would put individual purchasers at a disadvantage.
Radar Logic also responded to the RFI with concerns, stating, We are opposed to the plan being considered by the FHFA. We believe it is damaging, dangerous and, frankly, will not work.
As far as we can tell, the real beneficiaries of the proposed bulk sale would be the institutions who are allowed to buy these homes at substantial discounts, even to today's home values, Radar Logic stated.
Freddie Mac maintained that its focus is primarily on selling affordable housing to owner occupants at market value.
We are extremely mindful of the impact in our approaches to pricing and how it affects the values of neighborhoods should a discounted sale occur, the letter stated.
The GSE is requiring a letter of intent from any interested investors before entering into any bulk sales transactions.
Interested investors must first complete a questionnaire and submit a letter of interest. If approved, an investor will receive weekly portfolios to review and then agree to a letter of intent before a transaction is completed.