Federal housing plan calls for input

In an effort to clean out some of the backlog of foreclosed properties and help raise home prices, the Obama administration announced its plan to sell foreclosed properties owned by Fannie Mae and Freddie Mac and have the new owners convert them into rental properties. The Federal Housing Finance Agency, the U.S. Treasury and the Department of Housing and Urban Development recently launched an initiative seeking input on new options for selling these properties to maximize value to taxpayers and increase private investment in the housing market.

The federal call for input hopes to achieve goals such as reducing the distressed property portfolios and average loan loss of private investors and the FHA, assist in neighborhood and home price stabilization and address property repair and rehabilitation needs.

The Wall Street Journal reported that the federal plan was received with mixed reviews. David Steves, CEO of the Mortgage Bankers Association, told the news source that working with investors to clear out foreclosures is a valuable federal strategy.

"Without question, in order to settle the markets and move the foreclosed inventory, we're going to need both owner-occupied and non-owner-occupied solutions," Stevens told the news source. "That means investors have to come in to participate.

Richard Smith, CEO of Realogy, however, argued that foreclosed properties are being sold quickly to buyers at list price. He told the news source that institutional investors will not make big returns on this plan because the cost of managing rental properties varies by geographic location, causing many to possibly lose on their investment.  

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