Freddie Mac Says It Won’t Dump Foreclosed Homes

Freddie Mac Says It Won’t Dump Foreclosed Homes

Noting that steep price cuts could destroy the housing market, Freddie Mac has said it will not dramatically discount its backlog of foreclosed homes, American Banker reported Sept. 9.

The government-sponsored enterprise in a September letter told investors who are interested in acquiring properties in bulk through its REO sales unit HomeSteps that Freddie is currently selling 90 percent of its real estate-owned properties at asking prices and is not considering “significant discount pricing,” according to American Banker.

Observers have said that such discounts could help Freddie unload its backlog of foreclosed homes. But experts point out that dumping so many properties at once could also drive down housing prices broadly and harm an already faltering economy, a Freddie spokesman said.

“We absolutely don’t want to tank the housing market,” spokesman Brad German told American Banker.

Freddie properties spend an average of 110 days on the market before being sold, and their pricing is based on two broker price opinions: one from a listing agent and another from an independent broker, according to American Banker’s story.

In August, federal regulators issued a request for information on options for unloading foreclosed properties owned by the GSEs and the Federal Housing Administration. The deadline for submissions is Sept. 15.

At the end of June, Freddie had 60,569 REO properties and Fannie had 135,719. American Banker noted that many of the REO properties are not listed for sale because they may still be occupied or need repairs.

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