The next big damage control program for housing markets is likely to involve Fannie Mae and Freddie Mac, which may soon be asked to refinance millions of underwater homeowners into lower interest rate loans and approve bulk sales of homes they’ve repossessed to investors who would convert them into rentals.

Fannie and Freddie’s regulator, the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD), and the Treasury Department announced on Aug. 10 that they are exploring options for allowing bulk sales of homes to investors and converting Fannie, Freddie and Federal Housing Administration real estate owned properties (REOs) in some markets into rental properties.

FHFA wants to hear about any ideas for sales, joint ventures and other strategies that would benefit Fannie, Freddie and FHA REO disposition programs, with a Sept. 15 deadline.

Although there’s been no official announcement, the Obama administration is also said to be considering whether to allow millions of homeowners whose mortgages are backed by Fannie and Freddie to refinance in order to take advantage of lower interest rates — even if they owe more than their homes are worth.

An existing program designed to allow just that — the Home Affordable Refinance Program (HARP) — has helped only about 50,000 underwater borrowers, and administration officials told the New York Times that they are considering changes that would make more homeowners eligible for the program.

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