Reed says Obama administration supports his foreclosure plan

“As we continue moving forward on housing finance reform, it’s critical that we support the process of repair and recovery in the housing market,” said Treasury Secretary Tim Geithner. “Exploring new options for selling these foreclosed properties will help expand access to affordable rental housing, promote private investment in local housing markets, and support neighborhood and home price stability.”

Reed’s proposal seeks to increase the resale value of vacant foreclosed homes for Fannie Mae and Freddie Mac by turning them into profitable rental units that could be sold to the private sector. Reed’s plan to retrofit and renovate the houses would create jobs. 

“I am pleased these government agencies have finally recognized the urgent need to be proactive and creative in pulling the housing market out of the foreclosure tailspin,” Reed said in a statement. “If we can’t address the foreclosure crisis, then it will be difficult to achieve a sustainable economic recovery.”

Reed, a senior member of the Banking Committee, recently sent a letter to the FHFA’s Acting Director Edward DeMarco, which followed a similar letter late last year to HUD Secretary Shaun Donovan. In the letters, Reed questioned why so many homes remain vacant when there is a need for affordable rental housing. 

DeMarco said the plan could help Fannie and Freddie “reduce taxpayer losses” and “bring stability and liquidity to housing markets.”

“Millions of families nationwide have seen their home values impacted as their neighbors’ homes fall into foreclosure or become abandoned,” Donovan said. “At the same time, with half of all renters spending more than a third of their income on housing and a quarter spending more than half, we have to find and promote new ways to alleviate the strain on the affordable rental market,” he said. 

“Taking steps to encourage private investment in REO properties and transition them into productive use will help stabilize neighborhoods and home values at a critical time for our economy.”

According to the Obama administration, possible proposals may include:  

• Reduce the REO portfolios of Fannie, Freddie and FHA to save taxpayer money. 

• Address property repair and rehabilitation needs.

• Respond to economic and real estate conditions in specific areas. 

• Assist in neighborhood and home-price stabilization efforts.

• Determine the appropriate disposition strategy for individual properties, whether sale, rental, or, in certain instances, demolition.