FREDDIE MAC TO AUCTION OFF FORECLOSED PHOENIX HOUSES
Prospective buyers trying to purchase Phoenix foreclosed homes to live in will have first dibs on 135 houses that mortgage giant Freddie Mac is auctioning off next month.
Buyers, particularly first-timers using government incentives and mortgage financing, have had a tough time competing with investors for inexpensive foreclosed homes in metropolitan Phoenix over the past 18 months. This auction, Aug. 7 at the Phoenix Convention Center, is geared toward buyers who plan to live in the houses.
HomeSteps, the real-estate-sales unit of Freddie Mac, is offering to pay qualifying buyers up to 3 percent of their closing costs. Almost a third of the foreclosed homes going on the auction block are set aside for first-time buyers using federal funds from the Neighborhood Stabilization Program. [Emph. added]
So Freddie is giving would-be-occupants preference over investors even though, as seems to be the case, investors are willing to pay more for the properties.
By what logic does this make sense? In Phoenix and many other depressed markets, home prices have fallen by so much that investors can purchase properties and turn around and rent them out at a positive carry. That’s why they’re willing to outbid first-time buyers! Given the financial state that Freddie lately finds itself in, I’d think it would have an interest in getting the top possible dollar as it liquidates its OREO, rather than accept (and help subsidize!) a lower offer from a buyer who’s more likely to default in any event. Crazy. I thought we’d all decided that bending over backwards to let people buy houses doesn’t always produce good outcomes. . . . Despite all that’s happened, the cult of homeownership seems as strong as ever. . . .