A bill was introduced last Friday in Congress requesting that the Federal Housing Finance Agency cease its plan to sell Fannie Mae-owned foreclosed properties in California to large investors.
The “Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012” bill would prevent the FHFA from moving forward with its initiative to sell government-sponsored enterprise REO homes in bulk to institutional investors who would then offer them on the market as rental units.
The FHFA’s REO-to-rental initiative pilot program planned to sell more than 600 Fannie Mae-owned foreclosed units in Los Angeles and Riverside counties to institutional investors.
California Congressman Gary Miller (R-Brea) sponsored the bill. Miller gained support from seven other Golden State congressional members, including Ken Calvert (R-Riverside), Judy Chu (D-El Monte), Brad Sherman (D-Sherman Oaks), Dana Rohrabacher (R-Huntington Beach), Elton Gallegly (R-Simi Valley), Susan Davis (D-San Diego) and Joe Baca (D-Rialto).
In April, Miller and 18 other California congressional members sent a letter to FHFA acting director Edward DeMarco asking him to refrain this initiative from occurring within the state.
“We are concerned that including California counties in this initiative is in direct conflict with your duty as conservator to preserve and conserve the company’s assets,” the letter said. “In California, there is no question that disposing properties through bulk sales will yield a lower return for the GSEs and taxpayers than through traditional disposition methods.”
The California Association of Realtors believes bulk REO sales are not necessary in California because housing inventory is extremely low and demand is high. According to CAR data, sales of bank-owned homes are closing in an average of less than 60 days—and often above the list price—without government intervention.
“We are hearing from our members that housing supply is extremely tight, with REO inventory being especially low at only a two-month supply. Consequently, California homebuyers already are competing with small investors and encountering multiple offer scenarios,” said LeFrancis Arnold, president of the California Association of Realtors.
