Fannie and Freddie selling foreclosed homes in Rockbridge at a fraction of their value: Taxpayers cover the loss

Government-run mortgage giants Fannie Mae and Freddie Mac sold properties in Buena Vista and Rockbridge County for as little as 15 percent of their value, according to tax documents and deeds. One home in Buena Vista, assessed at $153,600, sold for $27,727. Another, in Glasgow, sold for only 15 percent of its assessed price.

Photo by Caitlin Doermer

Some of the properties went to Dallas investment companies, where Fannie and Freddie have regional offices.

Who bears the cost of these pricing shortfalls? “In recent years, losses have been paid by taxpayers,” said Andrew Wilson, Fannie Mae senior manager, corporate communications. “We have a responsibility to minimize those loses… It’s a responsibility that we take very, very seriously.”

Fannie Mae and Freddie Mac are funded by taxpayer dollars. They were taken over by the federal government in 2008, during the banking crisis.

Nearly one-third of area foreclosures since 2008 have come from Fannie and Freddie.
Wilson said Fannie Mae tries to target property sales to people who will live in the neighborhood.

“Our goal is to sell properties to owner-occupants,” Wilson said. “Somebody that’s going to move into the property and be a vibrant member of the community, we think is a stabilizing factor.”

But that is not always the case. “Sometimes, these properties are on the market for an extended period of time,” Wilson said. “They are sold to investors because an owner-occupant buyer has not stepped forward.”

However, Fannie Mae sold a Buena Vista home after it had been on the market for only three months and a home in Glasgow, after eight months on the market, which is at or below our area’s average for foreclosed properties.

According to real estate broker Dennis Hawes, foreclosed homes are on the market in Rockbridge County an average of eight months, and in Buena Vista, just over five months.

In addition to the impact on taxpayers, selling homes well below their assessed value may affect neighbors. Joe Vita, appraiser and owner/broker of Vita & Associates in Lexington, said these sales can bring down the value of other properties in the area. This may lead to others receiving less money when they decide to sell their home.

Scott W. Harrison contributed to the research for this story.
April 11, 2012

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