Fannie Mae and Freddie Mac should bundle at least 200 REO properties in a given metropolitan area into one pool to attract bids by large investors that are willing to rent out single-family homes for at least three years, according to Laurie Goodman, a senior managing director Amherst Securities Group (ASG).
Goodman also told members of a Senate Banking panel that nonperforming loans also should be included in such GSE-centric REO pools.
She is a proponent of bundling single-family units into a large group and giving the existing occupant/distressed borrower the option of becoming a renter.
“The bidder is often willing to pay more [for the property] if the home is sold with a ready-made renter — as it saves time, effort, and the cost of finding a renter,” Goodman testified.
She noted that ASG recently bid on and won a block of homes (with tenants in place) auctioned by Fannie Mae. It was the first TIP (tenant in place) portfolio auctioned by the GSE.
Goodman testified in support of the GSE regulator and Department of Housing and Urban Development's joint proposal to sell large pools of REO to investors that are willing to become landlords. She stressed that the excess supply of housing is due to fewer families that can and want to own a home.
By turning to investors who will convert REO into rentals, it will increase demand for housing and “absorb the excess supply,” Goodman said.