Eight Republican and Democratic California congressional members introduced legislation calling for the Federal Housing Finance Agency to cease its plan to sell Fannie Mae-owned foreclosed homes in California to large investors.
The bill’s arrival comes on the heels of a letter Congressman Gary Miller, R-Brea, and 18 other California congressional members sent to the FHFA in April asking the agency to refrain from implementing its REO pilot program in the state. With the program, the FHFA intends in part to sell more than 600 Fannie Mae-owned foreclosed units in Los Angeles and Riverside counties to institutional investors.
Titled the “Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012,” the bipartisan bill’s co-sponsors are Miller, 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.
The California Association of Realtors applauds the bill. It said the bulk REO sales program would negatively impact the state’s housing market and potentially further delay a housing recovery.
“We are hearing from our members that housing supply is extremely tight, with REO inventory being especially low at only a two-month supply,” CAR President LeFrancis Arnold says. "Consequently, California homebuyers already are competing with small investors and encountering multiple offer scenarios.”
Sales of bank-owned homes are closing in an average of less than 60 days — and often above the list price — without government intervention, CAR said.
In the letter, the 19 congressmen told FHFA Acting Director Edward DeMarco, “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 stated.