As some banks are venturing into rental activities as part of their disposition strategies, the Federal Reserve issues its policy statement regarding this matter.
The Fed’s policy statement says that the “Federal Reserve’s regulations and policies permit the rental of residential other real estate owned (OREO) properties to third-party tenants as part of an orderly disposition strategy within statutory and regulatory limits.”
In terms of general policy, the Federal Reserve states that banks should make “good-faith efforts” to dispose the properties at the earliest practicable date.
“Consistent with this (general) policy, in light of the extraordinary market conditions that currently prevail, banking organizations may rent residential OREO properties (within statutory and regulatory holding period limits) without having to demonstrate continuous active marketing of the property, provided that suitable policies and procedures are followed,” the Federal Reserve says.
“With mortgage delinquency rates remaining stubbornly high, the continued inflow of new real estate owned properties to the market–expected to be millions more over the coming years–will continue to weigh on house prices for some time,” the central bank continues.
Since the start of the U.S. financial crisis, millions of homes have been foreclosed by banks. CoreLogic earlier reported that close to 3.4 million foreclosures have been completed since September 2008 – the start of the U.S. financial crisis.
Last March, Bank of America, one of the nation’s largest mortgage servicers, announced that it will allow a limited number of mortgage customers who are facing foreclosure to remain in their homes as tenants through the bank’s pilot program called “Mortgage to Lease.” The bank announced that it will first retain ownership, but eventually these rented properties will be transitioned to investor ownership.
Also last February, the Federal Housing Finance Agency (FHFA), the agency that regulates Fannie Mae, Freddie Mac and 12 Federal Home Loan Banks, invited investors to purchase close to 2,500 Fannie Mae foreclosed properties with the condition that these purchased properties must be rented out for a specified number of years.
Whether you are a first-time home buyer, first-time home seller, empty nester, thinking about selling a home or buying a home, do contact the Guldi Real Estate Group. In Southern Maryland, the Guldi Group is the number one real estate team.