Government should convert REOs to rentals
The government's plan to dispose of the more than 250,000 foreclosed homes in its portfolio needs to include women and minority business owners and skew toward converting the properties to short-term rentals, according to an organization representing female real estate brokers. "The state of real estate owned disposition in the United States requires a significant rethinking in order to restart America's housing economy," said a proposal from the National Association of Women REO Brokerages. The document is a response to a request for information issued by the Federal Housing Finance Agency, the Treasury Department and the Department of Housing and Urban Development seeking ideas on how best to dispose of the federal REO inventory. "With tightened credit markets, uncertainty and debate surrounding emerging qualified residential mortgage requirements, and a glut of existing and unoccupied REO, it is imperative to develop short-term REO-to-rental strategies that accommodate for the needs of future homeowners as they, and the market, rebound," according to the NAWRB proposal. The group advocates three- to five-year REO rental strategies that keep current tenants, who may be former homeowners, in single-family REO residences "as a market-specific solution to meet increased rental demand and stall weakening home prices." Women and minority business owners are a key driver of economic recovery and should be specifically included in the future of REO disposition, said Cade Holleman, executive director of NAWRB. "A Neighborhood Stabilization Program-like funding mechanism is proposed in order to cover partial start-up capital necessary for small women-owned businesses to transition into a property management role, with investor, agency, and enterprise support," he said Radar Logic Inc., a real estate data and analytics firm, also recommends an REO-to-rental strategy, suggesting the Federal Housing Administration and the government-sponsored enterprises partner with private-sector property managers to oversee the rentals while retaining ownership of the properties. The company also said the government should "restructure seriously delinquent mortgages into a bundle of debt and equity securities that can be sold to investors or held by the government as investments." That move will prevent foreclosures and reduce the losses that would be incurred if the REO homes were sold, said Radar Logic in its RFI response. Write to Liz Enochs.