America's housing crisis has burdened many communities with foreclosed and abandoned houses. These houses can destabilize neighborhoods and bring down the value of nearby properties.
Fannie Mae understands this challenge and works to leave a positive footprint in affected neighborhoods. To help combat such destabilizing effects, our goal is to sell foreclosed homes rapidly and obtain the highest price possible, and we prefer to sell to owner occupants.
When Fannie Mae acquires a foreclosed property, we focus on maintaining and preserving the property as well as making any necessary repairs. In many cases, this involves sprucing up the property to make it more attractive to homebuyers. Appropriately priced and marketed, properties return more quickly to productive use – most often as family homes.
Our experience shows that move-in ready homes command higher prices and sell faster, which helps stabilize neighborhood property values and reduce Fannie Mae's credit losses, to the ultimate benefit of American taxpayers. Last year, we sold more than 243,000 Fannie Mae single-family properties, about 44,000 more than we added to our inventory during the year.
When Fannie Mae acquires a property, we hire a field service company to clean and secure the house and cut the grass. We assign the property to a local real estate professional who helps us determine the scope of work needed to get the house market-ready. We generally rely on both broker advice and a professional appraisal to set an appropriate price for the property. Our goal is a price that maximizes our return while creating an attractive buying opportunity so the house sells quickly, minimizing our carrying costs.
Work on the property may include repairs and upgrades, such as painting, fresh carpet, and new appliances. In order to control costs and ensure consistent quality, we leverage a national network of contractors. Our business volume enables us to negotiate advantageous pricing on items like carpeting and appliances.
When the work is done, prospective buyers typically see a move-in ready family home, not a foreclosure-stigmatized, bank-owned property.
With this approach, we sold nearly 60 percent of our properties to owner occupants, nonprofit organizations, or public entities in 2011. This helps strengthen the community because the families who move into these properties generally work and shop locally, attend neighborhood schools, and continue to invest in their homes.
In fact, we let owner occupants move to the front of the line under our FirstLookTM program. Only such buyers, along with community-based organizations using public funds to stabilize neighborhoods, may make an offer on a property during the first 15 days it is listed on www.homepath.com, which provides photos and descriptions of available properties. After 15 days, investors may make offers as well.
Also, we recently rolled out a new feature on homepath.com that makes it easier for homebuyers to purchase Fannie Mae properties. Through Online Offers, real estate agents can more efficiently submit and track their clients' purchase offers online. Learn more about the initiative in this FM Commentary I posted in February.
While the nation works through the housing crisis, Fannie Mae is creating housing opportunities for thousands of families, which contributes to a stable environment for America's communities. Find out more about our efforts to improve and market foreclosed homes in this CNNMoney interview, and read this FM Commentary from P.J. McCarthy to learn more about HomePath and FirstLook.
Jay N. Ryan, Jr.
Vice President for REO Sales
March 6, 2012
The views expressed in these articles reflect the personal views of the authors, and do not necessarily reflect the views or policies of any other person, including Fannie Mae or its Conservator. Any figures or estimates included in an article are solely the responsibility of the author.