Foreclosure buyers to be handpicked

Freddie Mac, the mortgage-finance company under US conservatorship, will auction about 300 homes in Southern California and Las Vegas to targeted borrowers in a sale designed to thwart bargain-seeking investors.

Lower-income purchasers who qualify for government aid will be given preference in the auctions in Las Vegas on April 24 and Riverside, California, on April 25, the Virginia-based company said.

"There has been a heavy movement of investors jumping back in as these homes are becoming very affordable," said New Vista Asset Management chief executive officer Jim Park, who helped devise the auction.

"Affordability would be a good thing for homebuyers, but they're getting outmanoeuvred by investors," said Park, whose firm will earn 3 per cent from each transaction.

The sales will reduce an inventory of more than 45,000 properties it acquired amid foreclosures from the collapse of the mortgage market in 2007.

Freddie Mac and Washington-based Fannie Mae, the biggest sources of US mortgage funding, were put under government control in September 2008 amid losses.

Local non-profit housing advocates will compile lists of eligible bidders. To qualify for government aid, the homes can't be sold for more than 99 per cent of their value.

- BLOOMBERG