FHFA & HUD-OIG Joint Report on Federally Owned or Overseen Real Estate Owned Properties - FORECLOSURE FRAUD

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FHFA & HUD-OIG Joint Report on Federally Owned or Overseen Real Estate Owned Properties

FHFA & HUD-OIG Joint Report on Federally Owned or Overseen Real Estate Owned Properties

Executive Summary

The Offices of Inspector General for the U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency (HUD-OIG and FHFA-OIG) have produced this report on “real estate owned” (REO) properties. REO are residential properties that have been foreclosed upon and transferred into an REO inventory for management and ultimately disposition.

This report addresses REO properties held by or on behalf of either HUD or
the Government-Sponsored Enterprises (GSEs or enterprises) for which FHFA
serves as conservator—the Federal National Mortgage Association (Fannie
Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
HUD and the GSEs have created infrastructures to manage and sell REO
properties. Though those infrastructures differ somewhat from one another,
they all rely heavily on contractors to perform tasks central to effective
REO management: (1) securing properties to avoid theft, vandalism, and
unauthorized use; (2) maintaining and repairing properties as needed;
(3) pricing properties appropriately through broker price opinions or
appraisals and satisfactory promotional efforts; and (4) selling properties
to homeowners or investors within a reasonable period.

As of September 30, 2012, HUD held 37,445 REO properties while the GSEs
held 158,138. In addition, the “shadow inventory”—residential loans at least
90 days delinquent—totaled 2,674,682 properties, roughly 7.5 times the size of
the HUD and GSE REO inventories combined. Even a fraction of the shadow
inventory falling into foreclosure could considerably swell HUD and GSE
inventories of REO properties.

This report reviews recent initiatives by HUD and the GSEs to shrink their
respective REO inventories, as well as steps taken by HUD-OIG and FHFAOIG
to assess and address their respective agencies’ REO activities.

[ipaper docId=145573053 access_key=key-2mfc4por8bjow3368h1t height=600 width=600 /]

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