Statement of
Meg Burns
Senior Associate Director for Housing and Regulatory Policy
Federal Housing Finance Agency
Before the U.S. House of Representatives Committee on Financial Services,
Subcommittee on Capital Markets and Government Sponsored Enterprises
.
“An Examination of the Federal Housing Finance Agency’s
Real Estate Owned (REO) Pilot Program”
May 7, 2012
Excerpt:
The full array of Enterprise loss mitigation programs are designed to keep families in their homes whenever possible, pursue alternatives to help families avoid foreclosure when a mortgage modification is not feasible, and finally, move to foreclosure expeditiously when necessary. The objective of all of these efforts is to facilitate the stabilization of communities and neighborhoods.
My remarks today will focus on the disposition of properties that are conveyed to Fannie Mae and Freddie Mac through the foreclosure process. Today, the two companies own approximately 180,000 REO properties and approximately one-half of these properties are available for sale at any point in time. Preparing properties for sale often takes several months for a variety of reasons, such as the wait period required under state redemption laws during which foreclosed borrowers may re-claim ownership rights, and time needed to repair damaged or neglected properties.
The pace of REO sales has improved substantially over the last few months, a trend that suggests that the excess supplies of these properties should decline in the future. However, the number of non-performing loans – particularly severely delinquent loans – remains large. Today, the Enterprises collectively own or guarantee approximately 1.3 million non-performing loans, the majority of which are more than a year delinquent. A priority for FHFA and both companies is to avoid foreclosure even in these protracted cases, through short sales, deeds-in-lieu, and deeds-for-lease.
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