Fannie Mae, Freddie Mac Accused of Destroying Home Values in Detroit with Foreclosure Sales

16 Aug

fannie mae, freddie mac, foreclosures, black wealth, black money

By JasmineHughes, Your Black World 

Fannie Mae and Freddie Mac are selling thousands of foreclosed properties in metro Detroit way under market value, a practice that local leaders say is weakening neighborhoods.

In some cases, homes listed by the government-financed mortgage giants are being snatched up by private investors, then re-sold within days or weeks for far more money.

Local officials are blaming the federal government, which took control of Fannie and Freddie in 2008 at a cost to taxpayers of $141 billion and climbing.

“It’s an unconscionable practice,” said Oakland County Treasurer Andy Meisner. “It’s fiscally irresponsible from their perspective because they’re getting pennies on the dollar, and it’s fiscally reckless from our perspective” because Fannie and Freddie “are almost single-handedly killing our property values.”

Meg Burns, chief of policy at the Federal Housing Finance Agency-(which regulates Fannie and Freddie), acknowledged the two companies are eager to sell foreclosed homes as quickly as possible. However, she maintained that the aim is to prevent vacant homes and neighborhood deterioration, not destroying property values.

Oakland County Deputy Executive Bob Daddow called the sales a “travesty” that have helped home values fall by a third since 2007, costing local governments tax revenues. ”It crushes our budgets. We’re completely revamping government as we once knew it,” Daddow said.

Critics say the low list prices are part of the companies’ rush to get foreclosed homes off their books while U.S. taxpayers are still covering the mortgage companies’ losses and that the reason Fannie and Freddie can sell homes far below their value is because, under the terms of the companies’ 2008 taxpayer bailout, taxpayers cover the cost of their losses.

Moreover, because the mortgage giants dominate the local market of distressed property sales, ordinary homeowners are forced to compete with their prices, further driving down property values and local tax revenues.

The situation is particularly serious in the region’s poorest cities. In Detroit, 49 Fannie properties sold this summer at 22% of market value, on average.

While resales by investors may help stabilize housing prices, critics say the U.S. taxpayers who bailed out Fannie and Freddie are the ones being shortchanged when these homes are listed for less than what they might fetch.

As Fannie and Freddie contribute to the downward spiral in property values, tax revenues fall too. Erik Ambrozaitis, a Rochester Hills Realtor and mayoral candidate, said the decline in revenues is a crisis. ” The roads in front of my house are starting to crumble. As a Realtor, I’m deeply concerned. As a homeowner, I’m really concerned. As a former council member, it is a disaster.”

About jasminesnroses

Hello World. I’m a recent graduate of Rutgers University, trying to make my mark. I have many interests, curiosities and ideas. All of which can be found here. So stick around =)

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5 Responses to “Fannie Mae, Freddie Mac Accused of Destroying Home Values in Detroit with Foreclosure Sales”

  1. WizardG August 16, 2011 at 11:47 pm #

    This is the kind of activity that has been going on in government and corporate collaboration for a long time now. It’s a fraudulent scam that those in power can manipulate without much scrutiny or fear of prosecution. It is also what privatization is all about! Take property and businesses that taxpayers financed and sell it to cronies and family in the know for pennies on the dollar. The crooked politicians are keen on this kind of activity and most of them are like gangsters in public office. Just try to confront one and you’ll see how much they carry themselves like mob bosses! It’s all about wealth, and power not about public servitude.

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  1. Fannie Mae, Freddie Mac Accused of Ruining Home Values in Detroit and Other Cities « Your Black Money, Black Wealth, Black Enterprise - August 16, 2011

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  2. Fannie Mae, Freddie Mac Accused of Ruining Home Values in Detroit and Other Cities « Black Politics for African Americans - August 16, 2011

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  3. Fannie Mae, Freddie Mac Accused of Ruining Home Values in Detroit and Other Cities « Black Politics for Black America - August 16, 2011

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  4. Fannie Mae, Freddie Mac Accused of Ruining Home Values in Detroit and Other Cities « Your Black Politics - August 16, 2011

    […] Continue reading → Like this:LikeBe the first to like this post.  August 16, 2011  Staff Categories: Uncategorized […]

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