California introducing bill to stop bulk REO sales

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds California Congressmen Gary Miller (R-Brea) and seven other California congressional members for introducing legislation that calls for the Federal Housing Finance Agency (FHFA) to cease its plan to sell Fannie Mae-owned foreclosed homes in California to large investors.

H.R. 5823, the “Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012,” prevents the FHFA from implementing an initiative to sell Fannie Mae real estate-owned (REO) properties in California to institutional investors.  The bill’s co-sponsors include 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).

“C.A.R. applauds these California representatives for understanding that the bulk REO sales program would negatively impact the housing market in California and potentially further delay a housing recovery,” said C.A.R. President LeFrancis Arnold.  “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 home buyers already are competing with small investors and encountering multiple offer scenarios.”

C.A.R. believes bulk REO sales are not necessary in California because housing inventory is extremely low and demand is high.  According to C.A.R. 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.

The introduction of the bill follows on the heels of a letter Congressman Gary Miller and 18 other California Congressional members sent to the FHFA in April asking the agency to refrain from implementing its “REO Initiative” pilot program in California.  The REO Initiative pilot program calls for the sale of more than 600 Fannie Mae-owned foreclosed units in Los Angeles and Riverside counties to institutional investors.

The letter stated, “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…  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.  This means that such a program will increase losses to the taxpayer and GSEs,” the letter concludes.

The 19 California Congressional members who backed the letter include Gary Miller, Jerry Lewis, Ken Calvert, Jeff Denham, Elton Gallegly, Dana Rohrabacher, Buck McKeon, Duncan Hunter, Brian Bilbray, Mary Bono Mack, Susan Davis, Brad Sherman, Joe Baca, Grace Napolitano, Judy Chu, Jim Costa, Adam Schiff, Barbara Lee, and Howard Berman.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS®  is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Source: California Association of Realtors (CAR)

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