U.S. home foreclosure sales ban lifted by mortgage giants Freddie Mac and Fannie Mae

U.S. home foreclosure sales ban lifted by mortgage giants Freddie Mac and Fannie Mae

Foreclosure sales all over the country are set to resume soon as government mortgage firms Fannie Mae and Freddie Mac advised real estate agents to restart their processing as usual. The companies have put a freeze on sales of foreclosed homes because of the foreclosure documents fiasco that erupted two months ago.

Freddie Mac sent a memo to agents instructing them to “resume all normal sales activity” while Fannie issued a memo telling agents to “proceed with scheduling and holding the closings” of foreclosure sales and to coordinate “if a title issue arises with respect to the potential defect of an affidavit used in the underlying foreclosure.”

The Federal Housing Finance Agency worked with Fannie Mae to make the decision after a thorough examination of foreclosed properties which the mortgage company has acquired. The actual reviews have not been completed and foreclosure sales may not reach the usual level of activity prior to the paperwork debacle.

“Our decision was motivated by several factors including the protection of buyers with title insurance, the negative impact lingering foreclosed properties has on neighborhoods and the cost burden that is placed on taxpayers when [bank-owned] sales are suspended,” a Fannie spokesperson said in a statement.

About 240,000 foreclosed properties worth $24 billion were owned by the two mortgage giants as of September. Freddie and Fannie will incur heavy losses if they are unable to resell those properties. Prospective buyers can also demand discounts or cancel deals if further delays are encountered. Lifting the moratorium on foreclosure sales may trim mounting losses obtained by the two firms. The federal government has so far spent $134 billion in their takeover of the troubled mortgage companies since 2008.

Posted by James Fried on Saturday November 27 2010, 4:23 AM EDT. Ref: Wall Street Journal. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0