A booming housing market, stronger underwriting standards, and more effective foreclosure prevention practices have reduced home foreclosure volume in recent years, but when they do happen, Fannie Mae’s work is far from over.
In fact, to help save precious affordable housing stock, Fannie Mae is doubling down on its innovative efforts to repair and preserve foreclosed single-family homes and put them back in the hands of owner-occupants, and in many cases, into the hands of first-time homebuyers.
To ensure that a property attracts owner-occupant buyers, we renovate a home by making a wide range of repairs. Cosmetic repairs involve more visual items like fresh paint, new flooring, and upgraded appliances. Some homes need more extensive repairs, such as plumbing, electrical, heating ventilation and air conditioning (HVAC), or other mechanical system updates.
When required, we address environmental or health issues, such as lead-based paint, discoloration, and water supply upgrades.
We also believe lower energy costs and quality repairs will help reduce borrower expenses associated with owning a home and support sustainable homeownership. That is why we make “green” repairs that involve the installation of low-flow water efficient plumbing fixtures, energy-efficient appliances, programable thermostats, and LED lighting.
Many of you understand the complexity of undertaking home repairs. Just think about this in the context of your own home. It can be overwhelming to say the least. So, imagine this process applied to an entire group of homes spanning the continental United States and its territories.
Even though our real estate-owned (REO) inventory is a fraction of what it was in the years immediately after the financial crisis over a decade ago, repairing as many properties as we do presents challenges that require innovative solutions. That is why we have streamlined our repair process to ensure repairs are made quickly and efficiently.
To scale this approach over a wide geographic area, Fannie Mae relies on key partnerships with real estate agents, builders, and repair contractors to facilitate repairs and upgrades. We have created efficiencies through technology and process innovations by building repair management processes into third-party platforms.
As an example, our mobile repair scoping application connects real estate agents and general contractors for collaboration in a co-scoping bid process. For those of you who watch fix and flip shows, you may have witnessed co-scoping. This is the process that has a real estate agent and general contractor walk a property together to ensure the repair bid process captures a comprehensive list of needs for the property.
Another example of this innovation is how we utilize an integrated design board deployed through our technology and leveraged during this co-scoping process. This design board shows available color schemes, fixtures, and finishes to create standardized repair results across our REO portfolio regardless of property location. The real estate agent and general contractor even come together after repairs are finished to confirm the initial scope of work is complete and meets our standards.
We are seeing incredible results and benefits of this work. In March 2022, 95% of repaired properties in our REO portfolio were sold to owner-occupant buyers.
Fannie Mae’s REO repair strategy ensures that the nation’s housing supply is improved, it helps support homeownership, and it contributes to community stabilization.
We continue to build on our repair strategy and technology to help create affordable and sustainable homeownership opportunities and will do so for years to come.