Friday
July 25, 2014

Demand for REOs Is Softening, Fannie Says

|
-A A +A

Demand for REOs Is Softening, Fannie Says

Fannie Mae’s sales of REOs fell 14 percent during the fourth quarter compared to the previous quarter, as the mortgage giant notes weakened demand for foreclosed properties.

"Between higher pricing in some markets and somewhat higher interest rates, we have seen demand for REO properties soften a bit,” says Timothy Mayopoulos, Fannie’s chief executive. “In addition, we are seeing less interest from institutional buyers."

Fannie Mae, along with Freddie Mac, is trying to spur interest this spring by rolling out incentives to attract owner-occupants to its REOs. Fannie’s incentives include closing cost assistance in 27 states available to owner occupants of its REO homes. The agency could cover up to 3.5 percent of the final sales price in closing costs for qualified buyers. The incentive applies to buyers who submit offers on homes by March 31; the transactions must close before June.

Fannie Mae ended 2013 with an REO inventory of 103,229 single-family homes. In 2014, REO acquisitions are expected to dwindle with lower delinquency rates and from a “slower pace of completed foreclosures,” Fannie noted in its fourth-quarter financial report.

Fannie notes that rising home prices helped the agency reduce its credit losses on REO sales last year. The net proceeds it received from its single-family REO sales were equal to 67 percent of the loans’ unpaid principal balance in 2013, compared to 59 percent in 2012.

Source: “Fannie Says Demand for REOs Is Weakening,” National Mortgage News (Feb. 24, 2014)

Read more

Mortgage Giant Offers Closing Cost Help to REO Buyers
Freddie Mac Offers Up Cash Incentives to Agents