Fed program to sell foreclosed homes

Federal officials today are announcing an 18-metro program aimed at putting foreclosed properties in the hands of local non-profits.

Atlanta is one of the areas chosen, according to a spokesman for the Federal Housing Finance Agency, which developed the program working with Fannie Mae and Freddie Mac.

The idea is to stabilize neighborhoods – and markets – that were badly hit by the housing crisis, which in Atlanta resulted in an estimated quarter-million homes going through foreclosure in just a few years.

The non-profits “get first crack at purchasing these properties,” said FHFA spokesman Peter Garuccio.

The arrangement calls for Fannie and Freddie to pick up the costs of maintenance, upkeep and taxes, he said. “They get discounts for what we refer to as cost avoidance.”

The idea is that ownership by non-profits would keep those houses from being subject to vandalism and squatters that damage the local environment – as well as local housing values. Moreover, taking those properties out of the pool of foreclosures will improve the average value of area homes.

Among the local non-profits who are likely to take advance of the program is the Atlanta Neighborhood Development Partnership, Inc.

Since the start of the housing crisis, the group has acquired and done improvement work on 425 vacant homes, according to John O’Callaghan, the group’s chief executive, who praised the new program.

“There are many neighborhoods in our region that have been left behind in the housing recovery and continue to struggle with vacancies, blight and negative equity,” he said.

Fannie Mae and Freddie Mac, the huge, federally-chartered companies that are central to the program, buy mortgages from lenders. By mid-2010, the two agencies held nearly 250,000 mortgages on which owners had defaulted, a foreclosure was not carried out and lenders had taken ownership.

Those properties, known as “real estate owned” or REO, are still a burden on some areas.

“The number of REO properties that Fannie Mae and Freddie Mac hold continues to decline nationwide, but there are still some communities in which the number of REO properties remains elevated,” said Melvin Watt, director of the FHFA in a statement.

Many of the properties are worth less than $75,000 but the program will include properties up to $175,000, according to Fannie and Freddie currently holds up to 700 REO properties in Atlanta, according to FHFA spokesman Garuccio.

The program actually launches Dec. 1.

FULL STORY by Michael Kanell, Atlanta Journal-Constitution