Market Analysis: Let’s Solve The REO Problem

*Let’s Solve The REO Problem*
**By Tony Garritano**

***We hear a lot about the REO issue these days. Let’s face it, it’s dragging our industry down. So, how do we fix this? We need more players to step up with creative solutions. For example, PROGRESS in Lending has learned that Carrington Holding Company, LLC (Carrington) has an agreement with certain investment funds managed by Oaktree Capital Management, L.P. that will fund an initial purchase of up to $450 million in distressed single family homes on a national basis. These homes will be managed as rental properties by Carrington, to meet the growing market demand for rental units, and as part of the industry’s effort to remove distressed properties from the sales inventory to help stabilize the housing market. Here’s the scoop:

****Carrington, which currently manages over 3,000 single family rental homes under Fannie Mae’s Tenant-in-Place and Deed-for-Lease programs, was the first company to pursue a strategy of renting out REO (lender-owned) properties, and has developed a national field services network along with a proprietary software system that allows for centralized property monitoring and management.

****“We believe that re-deploying vacant REO properties into rental homes is a way to help revitalize the housing market,” noted Carrington Founder and CEO Bruce Rose. “Reducing the number of distressed properties for sale can help stabilize home prices and putting families into currently-vacant homes can begin the healing process for neighborhoods that have been damaged by foreclosures.”

****“Carrington’s REO rental program is an excellent fit for our investment strategy, which includes a broad range of debt and equity investments in real estate-related investments and restructurings.” said John Brady, Oaktree’s head of global real estate.  “We believe that this is not only a unique investment opportunity with few qualified large-scale competitors, but one that also has the potential to have a broader positive effect on the housing market and the overall economy.”