The sale to Pacifica Companies is the first in a new program aimed at reducing the so-called shadow inventory of foreclosed homes by offering blocks of properties to private investors. The investors are expected to hold the homes as rentals for an unrevealed period of time before they can be sold.
Florida had three tranches of homes, including 376 in Southeast Florida, which had been repossessed and were owned by federal mortgage backer Fannie Mae.
In addition to the $12.3 million in cash, Fannie Mae will receive 90 percent of the proceeds from the homes until it collects $49.3 million, according to a transaction summary released Monday. After that, Fannie Mae and Pacifica Companies will split the proceeds. Pacifica will also receive 20 percent of all gross rental income as a management fee for overseeing daily operations of the rentals. The estimated transaction value for Fannie Mae is $78.1 million.
“The transaction is designed to promote home price stability, improve quality of housing stock and enhance rental inventory of markets by utilizing a rent-and-hold strategy,” according to the summary.
Nationwide, about 2,490 Fannie Mae-owned homes were being offered in bulk sales to investors. There were no acceptable bids on 541 Atlanta-area homes, according to a Federal Housing Finance Agency announcement Monday. The other properties are in Illinois, Arizona, California and Nevada.
A source familiar with the sales said the Atlanta homes will either be repackaged or sold individually through the government’s traditional foreclosure process or the website www.homepath.com.
The program has faced opposition from the National Realtors Association for taking away inventory in high-interest areas where the supply of homes has dried up.
“Florida is one of the hottest markets in the U.S. and there’s absolutely no reason to sell those homes in bulk,” said Dean Hooker, owner of Pompano Beach-based Southeast REO, which specializes in bank-owned homes. “People are knocking down the doors for properties.”
In Palm Beach County, 6,788 single-family homes were on the market in July, 43 percent fewer than last year during the same time and 50 percent fewer than in 2010.
Statewide, there were 100,657 single-family homes for sale last month. That’s about a five-month supply and 41 percent below last year.
But others believe private investors are better equipped to handle the distressed properties.
“They are more capable of managing the properties, getting them in the right condition and putting them on the market for rent or sale,” Boca Raton-based Realtor Tim Kinzler said last month. “It’s about finding a balance.”
Pacifica Companies said it was not prepared to comment Monday. Founded in 1978, Pacifica is a real estate development firm that owns and manages hotels and housing communities in the U.S., Mexico and India.
Source: Palm Beach Post