Government Sponsored Mortgage Buyers Ask for Resumed Sales of Foreclosed Properties

 The Federal National Mortgage Association - Fannie Mae - and the Federal Home Loan Mortgage Corporation - Freddie Mac - have started asking Real Estate agents to resume selling foreclosed properties nationwide. The two companies said the decision was prompted by a number of factors, including negative effects of prolonged foreclosures, protection of buyers, and cost burden to taxpayers.

Fannie Mae said it has begun advising Real Estate agents to resume scheduling and completing sales of foreclosed homes under its watch. It specifically instructed agents to closely work with designated personnel who are assigned to settle possible title issues in case there are loopholes in affidavits used for foreclosures. In effect, the company has lifted a moratorium on sales of foreclosed Real Estates. It added that its actions were all set after consultations with watchdog Federal Housing Finance Agency.

For its part, Freddie Mac has issued a memo to tell its agents to resume normal sales activities. It is still unclear how Real Estate agents would react and how sales would pick up after the recommended resumption of foreclosed properties sales. Market observers are also uncertain how agents could heed the advice as home lenders are still in the process of completing reviews of their documentations.

As of September 30, Fannie Mae and Freddie Mac have a combined foreclosed-property portfolio of about 240,000, with an estimated value of about $24 billion. The two companies have been forced to stall sales of such foreclosed properties after a scandal that rocked mortgage lenders. Numerous complaints were filed against such lenders’ alleged practice of mishandling foreclosure documents and processes.

The two government-sponsored firms have been warning that inability to sell foreclosed homes or prolonging sales could incur higher carrying expenses. Delays in sales could also prompt buyers with contracts to further reduce their asking prices. Such buyers could also simply walk away from the deals, an occurrence that is not likely for the industry.

Fannie Mae and Freddie Mac were both taken over by the US government in 2008 after infusion of huge financial packages. The two have incurred costs of about $134 billion so far, which is shouldered of course by taxpayers. As early as August, Fannie Mae has been warning that it may face huge fines if keeping foreclosed homes would be unreasonably prolonged.

Fannie Mae specifically aims to resume sales of foreclosures serviced by several mortgage lenders. Those banks include Bank of America, JP Morgan Chase & Co, Ally Financial Inc, Sovereign Bank, and OneWest Bank.

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