The Federal Housing Finance Agency (FHFA) recently announced the first step of a Real-Estate Owned (REO) Initiative targeted to hardest-hit metropolitan areas, which was originally announced in August 2011. This initiative will allow eligible investors to purchase pools of foreclosed properties under the stipulation that the purchased properties must be rented for a specified number of years. The rental period is meant to provide relief to local housing markets that continue to be depressed by large volumes of foreclosed properties and those that are in need of rental housing.
Interested investors may “pre-qualify” to establish financial capacity and operational expertise to bid on transactions in the initial pilot phase as well as subsequent phases. The pre-qualification will require interested investors to meet certain minimum criteria including, but not limited to, (a) financial wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity; and (c) agreement to keep certain information about the REO and related matters confidential.