Freddie Mac will use a new method of valuing REO acquired this year.

The government-sponsored enterprise acquired 24,300 REO properties in the third quarter. It sold more than 25,000, and held an inventory of nearly 60,000 previously foreclosed homes.

"We've struggled with REO valuation," said Tracy Mooney, senior vice president of single-family servicing at Freddie Mac, during the Mortgage Bankers Association servicing conference in Orlando, Fla.

Last year, the GSE tweaked its existing valuation model to the pricing characteristics of REO.

Under the new system, the Freddie team in Dallas and in McLean, Va., will measure the variances between the original broker priced opinion ordered for the property.

If the BPO comes in too low when compared to the model, Freddie will order an automated valuation or even a full-scale appraisal of the property until it is more in line with what the home should be worth, Mooney said.

"We're doing this to minimize dysfunction in the market place, by hopefully eliminating broker-appraiser coercion, and the stigma of severely undervalued REO," Mooney said.

Freddie put a pilot program in place in 2011 for 4,000 REO. Mooney said the GSE aims to apply the new valuation system to short sales by mid-2012.

"We think we've seen proven results from the pilot," Mooney said.