Gov't losses big in home market

WASHINGTON -- The nation's teetering economy has Uncle Sam playing a growing role in neighborhoods across the country — as a homeowner.

The combination of a deep recession and a foundering housing market has left the government with more than 50,000 houses on its hands — enough homes to fill a city the size of Riverside, Calif., or Miami. Now federal records show it's struggling to unload the houses and facing billions of dollars in losses.

"Everybody's in this market together," says Bill Apgar, a senior adviser to Housing Secretary Shaun Donovan. "Obviously, this is not the best time to be a home seller."

In many ways, the government's situation parallels what thousands of other homeowners are confronting: The houses it owns are harder to sell, they typically sit empty longer, and in many cases, their values cratered as the real estate market collapsed.

Since 2007, the Department of Housing and Urban Development has acquired at least 110,000 foreclosed houses, its records show, spending about $12.2 billion to reimburse lenders after the owners defaulted on government-backed loans. So far, HUD has been able to recover only about $5.5 billion by reselling them. It has about 38,000 homes still for sale.

The government's houses are divided among a handful of agencies. Most came into federal hands when borrowers defaulted on government-backed mortgages; in some cases, the government foreclosed on loans it wrote, or took over foreclosed properties from private lenders. The list doesn't include homes repossessed by federally chartered mortgage giants Fannie Mae and Freddie Mac.

Those homes account for only a fraction of all the homes that have been seized by lenders as the foreclosure crisis worsened — about 1.2 million nationwide in 2007 and 2008, according to the listing firm RealtyTrac. But at a time when the government is spending billions of dollars to rescue banks swamped by foreclosures, they create their own challenges.

"Every day a house is on the market, you have to pay to maintain it, to keep it secure, to cut the grass, and it's another day of wear and tear," says Mark Bologna, director of the Veterans Affairs Department's Loan Guaranty Service. He said the agency will almost certainly take over far more houses this year than it has in recent years.