Fannie Mae has tens of thousands of homes it has to have ready for the market. I exaggerate when I say “parade ready” because there’s always something when you show a foreclosure – maybe the fresh paint thinly disguises another smell? Or the frayed carpet just is not quite right?
Meanwhile, the cost that Fannie Mae bears to get homes ready to sell is staggering. According to Real Trends,
Fannie racked up $488 million in the first quarter of this year for holding costs (insurance, taxes, and maintenance); valuation adjustments for changes in market value; gains/loss when the property is sold; legal fees; eviction costs; weatherization so the pipes don’t freeze; cost to secure the property and more.
Fannie doesn’t have a lot of options, since they want (need?) to stabilize neighborhoods so that there is some potential residual value in the home. They don’t want to have the neighborhood go into decline, putting more downward pressure on overall house prices. In 2010, Fannie did “fixes” for 87,000 homes.
The total cost? About $1.8 billion. That’s some major cash.
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