Government officials recently announced the sale of almost 700 distressed homes that it owns as a result of defaulting homeowners with government-backed mortgages. The problem of what to do with all of this real estate has apparently been creating some uncertainty in the market.
While experts say that the recent sale won’t make a meaningful dent in the government’s current supply of distressed real estate, the overall progress being made by selling these types of properties and converting them to rentals will likely be beneficial for the market. The homes sold for about 96 percent of their appraised value as a group, which is also a fairly good sign for the housing market.
As a part of the bulk sale deals, buyers are limited as to when they can resell the properties and in some cases required to manage the properties as rentals for several years. These types of deals are expected to become more common, as the government attempts to unload many of the distressed homes that it owns and convert those properties into well-maintained, lived-in homes.
Fannie Mae, Freddie Mac, and the Federal Housing Administration still own approximately 202,000 properties, which makes up about half of the nation’s repossessed homes.
These large-scale real estate deals are considered to be a beneficial partnership between public and private sector that will help the recovery of the housing market.
Our Oakland County law firm helps Michigan residents and interested investors with a variety of real estate needs. More information is available on our website.
Source: Businessweek, “Sold! Hundreds of Government-Owned Homes,” John Gittlesohn, Sept. 13, 2012.