Refinance Mortgage Home Loans Refi

Fannie Mae and Freddie Mac have nearly doubled their inventory of seized property in the last year: Fannie directly owns 64,000 single-family homes and smaller Freddie owns 29,000. That's about the same number of households as in Madison, Wisc. Since there was a moratorium on foreclosures for much of the last two quarters, both companies say their holdings are about to expand significantly.

Fannie Mae and Freddie Mac will have to seize more properties. "While neither company had a large holding of subprime loans, the next wave of foreclosure activity, driven by unemployment, will include more of the loan types that both GSEs specialize in--30-year, fixed, prime conforming loans," he said.

This is great news for down-on-their-luck borrowers--Fannie and Freddie are eager to help with modifications or short-term loans--but bad news for taxpayers. That's because managing foreclosed properties is basically about losing as little money as possible. Since their sole mission is to help stabilize the troubled housing market; these two are likely to be losing more than any profit-making enterprise could stomach.

In what could be a stroke of genius or a costly quagmire, the two government-sponsored enterprises launched programs during the quarter to keep broke borrowers in their former homes, allowing them to rent at market rates after their property has been seized. While Freddie will let former owners or tenants stick around, Fannie will only let renters stay put and the foreclosed home is kept on the market. Fannie estimates there are approximately 1,800 units eligible for the program; hundreds of lease applications are in-process, according to spokeswoman Amy Bonitatibus. Freddie declined to comment on how many renters it currently has or expects to have.

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