San Diego Firm Buys Fannie Bulk Foreclosures

U-T San Diego -- San Diego real estate investment firm Pacifica Cos. bought nearly 700 foreclosures from mortgage giant Fannie Mae, federal officials said Monday.

The deal makes the local company the first winning bidder in Fannie's pilot program to sell repossessed homes in bulk to investors on the condition they convert them to rentals.

... University of San Diego real estate professor Norm Miller said the transaction appears to be beneficial for Fannie and Pacifica.

"The deal is structured so that Fannie gets priority on returns and then the returns shift more to Pacifica," Miller said. "This creates a strong interest in maintaining and improving the property for Pacific and yet rewards both."

"The initial carrot for Pacifica is the rather large management fee," said Miller, adding that the fee gives Pacifica a strong incentive to get the vacant units rented out.

This process works for Fannie Mae, a government enterprise, because it could speed up returns to the federal government, and in turn, taxpayers, Miller added. (Full Story)

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