Bank Of America To Sell Off Hundreds Of Foreclosed Homes In Second Bulk Offering

By Matthew Goldstein and Jennifer Ablan

NEW YORK, April 12 (Reuters) - For the second time in five months, Bank of America is tapping the red-hot market for foreclosed homes by seeking bids on a bulk offering of several hundred single-family homes.

Over the past several weeks, the nation's second-largest bank by assets has solicited bids for a bulk deal that includes up to 500 largely vacant single-family homes, some of which BofA acquired after its merger with Countrywide Financial, according to several sources within the real estate and mortgage sectors. Countrywide was one of the largest subprime lenders in the United States.

The bulk deal, which includes foreclosed homes in California, Florida, Arizona, Texas, Pennsylvania and Georgia, is one of the biggest block offerings of foreclosed homes ever done by a bank, these sources say.

The bulk sale comes at a time that institutional investors, including private equity firms and hedge funds, are raising money to invest in a bulk offering of 2,500 renter-occupied foreclosed properties being auctioned by Fannie Mae. The government-sponsored mortgage finance firm is currently accepting bids for that bulk sale under a trial project by the Federal Housing Finance Agency, which regulates both Fannie Mae and Freddie Mac.

The FHFA program is attracting interest from firms like private firm TPG Capital, investment firm Oaktree Capital Management, hedge fund Och-Ziff Capital, bond shop TCW and New York City's Amherst Securities Group, as previously reported by Reuters.

A Bank of America spokesman declined to comment on the bulk deal.

Late last year, Bank of America went to market with a smaller bulk offering o f a bout 200 foreclosed homes in California and Florida. One source familiar with that deal said the homes in that pool were acquired by several buyers.

One mortgage investor, who did not want to be identified, said it appears that Bank of America is moving to hold regular bulk sales of foreclosed homes as a way to reduce its inventory. The investor, who has not bid on either bulk deal, said it is a good time for the bank to s el l foreclosed homes, given the level of interest shown by institutional investors righ t now.


CASH COW

Private equity firms and hedge funds are eyeing the foreclosed market because the homes can be acquired at a significant discount and then rented out for steady cash flow. While the market for purchasing single-fa m ily homes remains stagnant in the wake of the financial crisis, rental properties are a hot commodity and even deemed a new asset class.

One advantage of a bulk offering by a bank is that investors are not required to hold onto the homes for an extended period of time.

In contrast, the FHFA, which is overseeing the Fannie Mae offering, is requiring buyers to hold onto the properties for several years to avoid having them flipped for a quick profit.

To date, the FHFA has prequalified several hundred investment firms, property managers and other organizations to bid for the Fannie bulk pool, say sources familiar with the process. But it's still not clear how many bids the FHFA will actually receive.

The deadline for submitting bids has been extended from early April to mid-May. But sources say the deadline may not be a firm one.

Comments

[cebva]

09:58 PM on 04/15/2012

The sixth Rape perpetrated by the banksters at BofA.

First Rape - Originating exotic loan products that were destined to fail - option arms, no escrows, teaser rates, no verifications
Second Rape - Packaging these loans into pools and paying to have them rated AAA
Third Rape - Selling these bundles of poo to unsuspecting investors (your pension fund)
Fourth Rape - Refusing to modify loans or approve short sales thereby causing many good and innocent people to lose their homes
Fifth Rape - Taking taxpayer bailouts while paying exorbitant bonuses and salaries
Sixth Rape - Selling the foreclosed properties at huge discounts to vulture funds they and their insider friends created.
Seventh Rape (yet to come) - another plea and bailout because they lose so much money selling the foreclosed properties so far below market.

[feelingdisposable]

08:03 AM on 04/14/2012

The wealthy investors will buy these houses at pennies on the dollar, put virtually no money into them, and then will try to rent them out for prices that most people can't afford. The ones that are in too bad of shape to snag a renter will sit neglected, with yards that look like hayfields and overflowing with garbage. It's a damn shame that the banks aren't willing to sell one house at a time (for pennies on the dollar) to people who don't have much money, but who need a place to live, but they're more than willing to sell them at a loss to "investors". Most individuals who buy a house to live in consider their house an investment.

[RobJames]

04:59 AM on 04/14/2012

If BOA is interested in seller financing, I'd take a hundred off their hands.

[Kenz300]

11:01 PM on 04/13/2012

The banks could have been doing more to help people refinance or make a short sale.

Instead they sat on short sale offers for months and did nothing. A short sale could have put the house in a qualified buyers hands and helped the person get out from a loan they could not afford. Now they will sell those homes to Wall Street Investors. The top 1% make out from the tragic loss again.

[wsdave]

05:14 PM on 04/13/2012

"Thanks To BofA You Can Now Buy Foreclosed Homes In Bulk"

No, WE can't, but the rich and other big investors can.

[DRaymond]

04:38 PM on 04/13/2012

Sorry, but just because you tag Bank of America on it does not mean that it is necessarily evil,

The 500 homes will likely be quickly converted into rentals.  Rentals are not evil.  At some point in the future, depending on the market conditions, some will be sold back to individual homeowners.  That is not evil.  If anything is evil it is their sitting vacant, being a visual eyesore and being attractive to squatters.

[anastmosis]

08:21 PM on 04/13/2012

What IS evil is selling the houses at a discount but in bulk that results in the only ones able to participate are a few already wealthy investors, instead of dealing with individual units locally and giving more an opportunity to participate, or beinging so quick to foreclose and evict and disrupt entire communities only to sell at a greater loss than if they had refinanced originally instead of refinancing with the original occupant and reducing one's losses as well as maintaining stability in the community.

[CAS1]

03:38 PM on 04/13/2012

Wheres all the people who cry about principal reductions being socialist? They should be outraged at this program! Oh yeah thats right they are the ones buying all these homes. Your doing a heck of job obama, I mean black bush.

[Janzee12000]

03:07 PM on 04/13/2012

Buy 3 in Nevada, get 1 in Detroit free...

[NOSOCIALNETS]

12:07 PM on 04/13/2012

Great, I will take 10.

[Mitchman57]

11:15 AM on 04/13/2012

Do we see a conflict of interest in this arrangement?

Naaaaaaaa.

[Mitchman57]

11:13 AM on 04/13/2012

... you see, this way a middle-man corporation gets between an average citizen and a good deal. Of course there's a bit of profit to be made for the trouble, right?

[IndyFem]

10:47 AM on 04/13/2012

"One advantage of a bulk offering by a bank is that investors are not required to hold onto the homes for an extended period of time."

Wow...
If the average person buys a short sale...and resells it too soon....they can be found guilty of "short-sale" fraud.
If the average person buys a short sale...and rents it back to the prior owners...they can be found guilty of "short sale" fraud.

Yet..."Bulk Investors" get a pass on these laws!

[robert horwitz]

09:38 AM on 04/13/2012

The really great thing about buying foreclosed homes in bulk is if the bank decides to foreclose one on you all you have to say is OK go ahead. Then you move to the next house and wait. If you've bought enough of them no matter how long you live you will always have a nice place to live.

[Mitchman57]

11:14 AM on 04/13/2012

Do you really think this is a great way to live?

[robert horwitz]

02:33 PM on 04/13/2012

Come on 57 you don't really think I'm being serious do you?

[KIampfbeobachter]

06:48 PM on 04/13/2012

Scheme has one logical error.
If I can buy ,say, ten homes in bulk and make a 10% down payment I can as well buy one for cash and never have to worry about being foreclosed.
One more thing to worry about id the title. The title after the MERS scandal has to be crystal clear otherwise the buyer might be losing his investment, thanks to MERS.

[benglert01]

09:12 AM on 04/13/2012

Wow no wonder BOA is taking their good old time to get back to me in my mod.

[BBackSoon]

11:27 AM on 04/13/2012

Do some research on how to prepare your financial worksheet. You need to show that you make enough money to pay your bills, but not so much to not need the Mod. It comes down to a few hundred dollars at the end of the month.

The one that I found a few years back suggested some percentages and gave good examples.

Again, spend some time doing research, because the numbers you give them will make or break your application.

Also you might get in touch with one of your local or state elected officials for some help. I ended up contacting my US Representatives office and the women in the office was of so much help. I cannot stress enough that you need someone with some clout to smooth over the BS.

I got kicked out of the program at one time because it took me 5 days to submit paperwork since I had said on the phone that I would fax the docs 'in a couple of days.' They saved me and my house.