Government Foreclosed Homes Increase with a Guaranteed Growth of Loans

The number of foreclosed homes by the government has increased drastically due to the growing proportion of home loans that certain government agencies have guaranteed. According to National Association of Realtors, almost 40% of the buyers with pre-owned homes in November took loans that were promised by the Federal Housing Administration.

The foreclosed homes to be sold from Fannie Mae during September 30 had reached to 72,275 units. Fannie Mae, within the initial 3 quarters last year, acquired 98,428 foreclosed properties. During the July-September quarter itself, almost 41,000 units were acquired and, by the third quarter’s ending, at least 89,691 foreclosed houses were sold. Simultaneously, in September, Freddie Mac’s foreclosure inventory increased within a period of one year by approximately 46%, increasing the number to 41,140 units.

In the 3rd quarter, it got 24,375 foreclosed units and apparently, 18,000 houses were sold off. The number of defaulters in home loans during October rose to almost 5% as anticipated by Fannie Mae. This was a hike from 1.9% during October 2008. The felonious loans that were apparently considered at these rates were those loans that had been into delinquency for approximately three months.

Photo by Kenteegardin

Government foreclosed homes increase with a guaranteed growth of loans.The rates of defaults in loan repayments in terms of the single-family units as assumed by Freddie Mac rose to almost 4% during the month of November. In fact, compared to 2008’s November record, this record showed a rise of 1.5%. Fannie Mae, has indeed revised its regulations of reviewing the home loans that provided the lenders and service providers with the ability to meet their requirements. This was done primarily to increase the speed of the selling of the houses foreclosed by the government. Now its repossessed units can be purchased and for that they do not even need to inform the service companies.

Previously, Fannie Mae used to ask the services for a submission of loan documents in 15 days before accepting any offer of purchase of foreclosed homes. This was done to make sure, if the service companies had followed the lending requirements of Fannie Mae.If there were any defects in the loan documents, then they could have choose to reimburse Fannie Mae to make up for the fatalities. They could have also bought the foreclosed units and sold them later on at more suitable prices. As the sales policies changed, Fannie Mae got rid of its repossessed units and helped the buyers with their purchase of homes.

Additionally, the growing demand for FHA loans might also raise the quantity of FHA homes that buyers can find. However, the FHA officials observed that they are formulating such policies that might curb the number of houses being foreclosed upon by the government. This also included the rise in accountability for lenders and excess FICO necessities and a hike in the minimum amount of down payments.