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Do you know you own 31% of foreclosed homes?

In September 2011, there were roughly 800,000 homes that had been repossessed, still in inventory. Of those 800,000, 248,000 were inventory for the federal goverment due to government backed mortgages through Fannie Mae or Freddie Mac. That means that 31% of Real Estate Owned (REO) properties were actually owned by US taxpayers. This is an alarming number. However, maybe even more alarming is the fact that the federal government issued a plea to you, yes you, to come up with a solution for handling and unloading the properties. See below:

Request for Information:
Enterprise/FHA REO Asset Disposition
The Federal Housing Finance Agency (FHFA), in consultation with the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development, is issuing this Request for Information (RFI) to solicit ideas for sales, joint ventures, or other strategies to augment and enhance Real Estate-Owned (REO) asset disposition programs of Fannie Mae and Freddie Mac (the Enterprises) and the Federal Housing Administration (FHA). The agencies are exploring alternatives that will facilitate the current and future disposition of REO, improve loss recoveries compared to individual retail REO sales, help stabilize neighborhoods and local home values, and where feasible and appropriate, improve the supply of rental housing.

This doesn't instill a whole lot of confidence. While certain private sectors may be more capable of dealing with strategy, certainly no one has any experience with the magnitude. The biggest issue in unloading the properties is that it cannot all be done at once. Economics 101 tells you that if supply is up, price goes down. 
So by opening the flood gates and letting the properties be expelled all at once, you are actually driving down the price. This certainly would not bolster this cardinal market sector nor even bandage the economy. However, if they are slowly released, the burden also rests on the taxpayer. Who do you think pays for the maintenance of the vacant homes, taxes, etc. Good guess, you do.

So, it remains to be seen, but the options ain't pretty. We need some truly ingenious taxpayers to come to the table. I wonder if they would be wililng forgive your government-backed debt in exchange for procuring a solution.

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