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""Senator Jack Reed"":http://reed.senate.gov (D-Rhode Island) has sent a letter to the director of the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) recommending the agency require Fannie Mae and Freddie Mac rent out foreclosed properties rather than immediately attempting to sell them at bargain prices.
[IMAGE]According to the senator's proposal, foreclosed homes would eventually be pooled and sold to investors to be rented.
As of June 2011, ""Fannie Mae"":http://fanniemae.com/kb/index?page=home held 135,719 single-family foreclosed properties, according to its second-quarter report. The carrying value of these properties was $12.5 billion - a cost that could decline if properties were being maintained by occupants and accruing rent each month.
""Freddie Mac's"":http://www.freddiemac.com/ single-family foreclosure holdings totaled 65,159 with a carrying value of $257 million, according
[COLUMN_BREAK]to its first-quarter 2011 report. (Freddie Mac's second-quarter report has not yet been released.)
Reed believes renting the properties would help the market on all fronts by reducing foreclosure inventories, providing affordable housing, and creating jobs in hard-hit industries.
""The number of vacant foreclosed homes waiting to be sold at depressed prices is increasing at the same time that the demand for rental properties is increasing,"" Reed said. ""It would appear that an answer to both of these problems could be found by analyzing these problems together.""
Renovating and repairing the GESs' properties to prepare them for rental would create jobs and make the homes more profitable when they are sold in the future.
""Rather than selling these vacant foreclosed homes at fire sale prices, we should be seeking ways to increase value for Fannie Mae and Freddie Mac. This proposal offers one way to do just that,"" Reed said.
Reed is not the first to suggest the GSEs rent foreclosed properties to keep them off the market in the short-term.
A similar proposal was already being considered by administration, and a bill with another similar premise is currently being considered by the House Financial Services Committee.
The ""Neighborhood Preservation Act"":http://dsnews.comarticles/bill-introduced-to-support-foreclosure-rentals-2011-08-01 (H.R. 2636) would authorize Fannie and Freddie to rent foreclosed properties back to their original owners or to other renters with five-year lease agreements.
