California state lawmakers have introduced legislation that would prevent the sale of Fannie Mae-owned foreclosed homes to large investors.
The California Association of Realtors supports the measure, saying that the bulk REO sales program would negatively impact the housing market in California and potentially further delay a housing recovery.
C.A.R. President LeFrancis Arnold add, 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.
California 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 from the bill’s sponsor, 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.
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