Amherst Securities Group says investors eager for GSE REO program
Investors are extremely enthusiastic about acquiring Fannie Mae, Freddie Mac and Federal Housing Administration REO properties in bulk and renting or selling them, Amherst Securities Group said Friday. Amherst's report arrives weeks after the Treasury, Federal Housing Finance Agency and the Department of Housing and Urban Development asked industry professionals to submit feedback on ways the government agencies can move distressed properties through REO asset disposition programs. Some 4,000 proposals were submitted to the FHFA — suggesting investors and others are immensely interested in the issue and want to be heard. "It is very clear to us that the economic value of the homes involved, and the benefit to the economy, is maximized by bulk auctions to investors (who will then turn them into rental housing)," said Amherst. "The massive housing market overhang is a clear danger to the U.S. economy — it creates significant stress on borrowers, communities, courts and the banking system — and is stifling growth in the broader economy." A few weeks ago, Morgan Stanley (MS) released a report, saying investors are warm to the idea of acquiring distressed properties in bulk from the government-sponsored enterprises. Amherst's report focuses specifically on the supply-demand imbalance that is currently making it difficult for property owners to offload properties. This imbalance has created a systemic shift in the housing market, making it more attractive for investors to eye properties as rentals that can possibly produce yield while improving the overall housing market. "Selling to investors can absorb this overhang and, at the same time, provide much needed supply to the rental market," Amherst Securities wrote. "It is clear that the faster the resolution, the faster the housing market can make a meaningful and positive contribution to the U.S. economy." Write to Kerri Panchuk.