Fannie Mae and Freddie Mac have resumed sales of foreclosed properties that were placed on hold in late September as a result of questions about improper affidavits used in the foreclosure process.

"Following a review of its REO acquisitions, and in consultation with its regulator, the company is resuming the scheduling and closings of sales of vacant REO properties," said Fannie spokeswoman Janis Smith.

Freddie notified its listing brokers on Nov. 24 that they can resume marketing and sales of REO properties previously placed "on hold" due to the foreclosure review process.

Freddie 'HomeSteps' brokers sold 26,300 REO properties in the third quarter, up 47% from a year ago. Freddie held 74,900 REO units as of Sept. 30, according to the GSE's third quarter financial report.

Fannie 'HomePath' brokers sold 48,000 single-family REO properties in the third quarter. The GSE had nearly 166,800 REO on its books as of Sept. 30.

Fannie said its decision to resume REO sales was motivated by several factors including the availability of title insurance to protect buyers.

The GSE also considered the "negative impact lingering foreclosed properties has on neighborhoods and the cost burden that is placed on taxpayers when REO sales are suspended," Smith said.

In other GSE news, Fannie is contemplating selling nonperforming mortgages out of its portfolio, offering the notes to the highest bidder, according to vendors and investors who have talked to the GSE about the plan.

At this point, no nonperforming loan (NPL) auctions are scheduled and the GSE is still exploring the situations, officials said.

Fannie, which has been under government control since September 2008, declined to comment.
Industry sources said if Fannie sells NPLs – instead of foreclosing on the mortgages and selling the resulting REO – it could save hundreds of millions of dollars, depending on the final sale price.

Over the past year the GSE, along with Freddie, have purchased nearly $267 billion of NPLs out of their MBS pools.

Now that the two have taken title to these "loan" assets, they must either resolve the mortgage loan out through a specialty servicer, or foreclose.

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