The first phase of the program will encouragerninvestors interested in participating to “pre-qualify” to bid on property inrnthe pilot phase of the program and any subsequent phases with the understandingrnthese properties would be held as rentals for a specified period of time. Thernexpectation is that the rental period will provide relief for local housingrnmarkets suffering under the large inventories of foreclosed and often vacantrnand/or deteriorating housing as well as providing additional options to somerntight rental markets.  </p

During thernpilot phase, Fannie Mae will offer pools of various types of assets includingrnrental properties, vacant properties and non-performing loans for sale.  The first transaction will be announced inrnthe near-term. </p

There hasrnbeen a lot of discussion in recent weeks about the value of linking REOrninventory reduction to rentals as one way of speeding recovery of thernmarket.  Much of the talk was driven by arnwhiternpaper prepared for Congress by the Federal Reserve which focused on thernissue and the probable cost.   It said inrnpart; “An REO to rental programrnthat relies on sales to third-party investors will be more viable if therncost-pricing differential (i.e. the discount offered to investors) can bernnarrowed which might be done by (a) structuring sales as competitive auctions;rn(b) making sales packages more attractive to a variety of investors.  A third option suggested by the Fed, providingrninvestors with the debt financing, does not appear to be part of the currentrnstrategy.</p

FHFA said it had received more than 4,000 responses</bfor a Request for Information posted last summer which sought input on optionsrnfor selling single-family REO held by the GSEs and FHA.  The pre-qualification step announced today willrnrequire potential investors to meet minimum criteria including, but not limitedrnto the financial ability to acquire the assets, sufficient experience andrnknowledge to analyze and bear the risks of the opportunity, and agreement tornkeep certain information about the REO and related matters confidential.  FHHFA said the agency wants to ensure thatrninvestors have the financial capacity and operational knowhow to managernproperties in such as way as to stabilize communities hard-hit by the housingrncrisis.  </p