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Utah foreclosures ease, but glut of houses on market remains

Real-estate » Homeowners on Salt Lake County’s west side hit hardest.

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One broker who specializes in REOs said the influence of these agencies helps Utah markets, given that the Freddie and Fannie are focused on promoting home ownership and devote financial resources to maintaining foreclosed properties, repairing homes and keeping up yards.

"I love working with them,’’ said Steve Cuillard, broker with Affiliated Realty Group who has sold REO properties for nearly 13 years. "Generally speaking, they are trying to sell their properties for top dollar, minimize the losses for investors and not stand out in a negative way in the neighborhood.’’

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But other real-estate agents complain that home sales involving Freddie and Fannie properties routinely fall apart, often due to bureaucratic delays and annoying paperwork requirements. Some claim that, as agencies beholden to U.S. taxpayers, Freddie and Fannie are not driven by ordinary market principles.

"It’s not a rational endeavor at any level, so it does not surprise me that people on the ground are confused and put off by it,’’ said Howard Headlee, executive director of the Utah Bankers Association.

Because Freddie and Fannie are still big players in home lending nationwide, the agencies can sometimes be involved at both ends of a home sale, simultaneously as the property owner and a key part of the financing.

"Let’s just say, it can be pretty inbred,’’ said Jeremy Peterson, an Ogden real estate agent and Republican state lawmaker. ``You don’t have traditional market forces at play. You have political forces.’’

Foreclosure data analyzed by The Tribune also show thousands of Utah REO properties still entangled in hybrid mortgage-backed securities, the so-called toxic assets created by Wall Street out of bundled subprime mortgages sold by original lenders. Documents list these properties as being owned, essentially, through financial instruments packaged by institutional lenders, with exotic names such as Argent Securities Inc. 2006-W4, US Bank GSMPS-Rp1 and Mortgage Investment Trust 2007-AR2.

Typically, these properties are held by smaller groups of private investors who are usually intent on recovering the full, pre-crash value of their investments and tend to be less flexible in negotiating on sales prices, several Utah brokers said.

"You’re going to see those assets setting on the market for long, long periods of time,’’ Cuillard said.

REO sales overall have grown in recent years while other property sectors stagnated, forcing real estate professionals into a hardscrabble side of the business that some might prefer to avoid. Others have embraced that segment of the market.

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At both ends of the spectrum, agents agree the crisis has profoundly changed selling real estate in Utah, probably for decades.

``We were crying with buyers at the closing table for realizing the American Dream and now four years later, we’re crying with them at the kitchen table when they’re losing it all,’’ says Mendenhall, the Re/Max agent. "There are still some emotional highs but definitely some lows that you will always remember.’’

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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