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While the ""REO Rental Initiative"":http://dsnews.comarticles/fannie-maes-first-bulk-offering-of-reo-to-rental-pilot-open-for-bids-2012-02-27 was supported by ""Capital Economics"":http://www.capitaleconomics.com/ when first proposed last year, a report released by the analytics company stated that the news was disappointing upon the discovery that 85 percent of the REO properties to be sold were already occupied by tenants.
[IMAGE] [COLUMN_BREAK]""The pilot plan will therefore do almost nothing to reduce the number of vacant homes for sale or provide more homes to rent,"" the report stated.
While the ""pilot transaction did not get to the heart of the issue,"" the report continued to state ""the plan remains in its initial stages and it could yet deal with the high number of vacant REOs currently on the market as well as future foreclosures.""
Amid this announcement is also the FHA's plan to raise its mortgage fees, a decision which Capital Economics stated would only reduce demand for housing rather than encourage it.
The FHA plans to raise mortgage insurance premium on loans less than $625,000 guaranteed by the agency from 1.15 percent to 1.25 percent starting April 1. In addition to this fee is the upfront mortgage insurance premium, which will be raised to 1.75 percent from 1 percent.
While the fees won't be extremely burdensome for borrowers, the report states the increase still comes at a time when the administration should set forth policies to boost demand, not shrink it.
