A recent announcement by the Obama administration say’s that there could be help for foreclosures just around the corner. Well, maybe. The plan is for Freddie and Fannie to join a government pilot program that may help to minimize the damaging effects of foreclosures.
Trying Something New
A new pilot program is in the works that would allow for lending giants, Freddie and Fannie, to bundle government-owned properties in foreclosure and sell them to investors. The idea is to combine distressed and value losing homes into a package that investors could purchase and turn into rental properties. The Obama administration is hopeful that converting these, otherwise lost souls of a home, would help reduce the number of foreclosures on the real estate market and give neighborhoods a chance of regaining value lost by high foreclosure rates.
Reduced foreclosure inventory, recouped neighborhood values and partial loan recovery for lenders make for what seems to be a sweet deal. However, not everyone is a fan of the idea and the plan has met some opposition before it has even hit the ground. Loan limiting rules, property qualification standards and tax considerations are all major hurdles that this program must jump if it is to be effective.