Marc Guzman's West County Blog

Several weeks ago I had reported that the Federal Housing Finance Agency (FHFA) was in the works to create a rental program for many of their foreclosure properties.  These foreclosure properties include the foreclosures owned by Fannie Mae, Freddie Mac and HUD.  So far, this appears to only be a pilot program that will begin in Spring 2012.  If successful, I’m sure the majority of the distressed properties owned by Fannie Mae, Freddie Mac and HUD will be pushed into the rental program.

Well the idea has now spread to several other big banks and a few are making moves to prepare for a similar program; Bank of America being one of these big banks.  But what I heard today surprised me even more… Carrington Holding Co. is in the process of raising $1 Billion from investors to purchase foreclosed properties.  Carrington Mortgage Services is already renting properties for Fannie Mae but are looking to acquire their own portfolio.  It appears they would prefer to participate within the REO rental program being implemented by FHFA.

So now FHFA is implementing a pilot program to begin in Spring of 2012… Bank of America has begun the initial stages of piecing together a similar program… and now an investment/fund management firm is preparing a large purchase of foreclosed homes to participate in the REO Rental program.  And there is word that other big banks and asset management firms are preparing for the same.

So what will this do to the current rental market?  Instead of creating a crash in housing values by releasing many foreclosures, a crash in the rental market is created instead?