California REALTORS® this week strongly objected to the bulk foreclosure sale program and called for a change of leadership at the Federal Housing Finance Agency (FHFA), the agency which initiated the pilot program and oversees mortgage giants Fannie Mae and Freddie Mac.
The California Association of REALTORS® (C.A.R.) released a statement on Monday objecting to the recent REO bulk sale transaction between Fannie Mae, the FHFA and Colony Capital. Colony Capital, a Santa Monica real estate investment company, purchased 970 foreclosed homes in California, Arizona and Nevada at auction from Fannie Mae for $176 million.
"Fannie Mae and FHFA's decision to move forward with the REO bulk sale in California amounts to another gift to Wall Street at the expense of taxpayers," said C.A.R. president LeFrancis Arnold. "The deal, which calls for the sale of more than 400 foreclosed homes in Los Angeles and the Inland Empire, not only hurts taxpayers and prospective home buyers, but will also delay a full recovery in the housing market."
According to C.A.R. statement, "The implementation of the ill-conceived program highlights the failure of FHFA to appropriately address this issue despite C.A.R. and others outlining alternatives. The botched execution of the REO bulk sales, and Home Affordable Foreclosure Alternatives (HAFA) and Home Affordable Refinance Program (HARP) under FHFA's oversight and leadership has demonstrated a lack of understanding of the housing market. Given these and other missteps, C.A.R. believes it is time for a change in leadership at the FHFA."
The bulk foreclosure sale is a pilot program of the FHFA intended to help clear the large numbers of foreclosed homes on the books of Fannie Mae and Freddie Mac. The National Association of REALTORS® has objected to the program. California and Florida REALTORS® have also deemed the program unnecessary since housing inventory in their markets is now at an all-time low, prices are rising, and demand for homes is up.
C.A.R. data indicates the median home price in the Inland Empire is up 15 percent from $172,000 in February 2012 to $198,270 in September, and unsold inventory is down from 5.3 months to 3.8 months during the same period. The median home price in Los Angeles has risen 37 percent from $272,920 in February 2012 to $373,020 in September, and inventory is down from 5.7 months to 3.7 months.
Although the Silicon Valley is not affected by the bulk sales program, Suzanne Yost, president of the Silicon Valley Association of REALTORS®, said the region is also experiencing a shortage of inventory. She noted the housing market has greatly improved statewide. Buyers are having a difficult time getting into the market because there are not enough homes to meet demand.
"By going forward with bulk sales of foreclosed properties, investors will be buying homes and holding them until prices appreciate further. These are homes that are affordable now for first-time buyers but may not be when prices have gone up. It is sad that FHFA is choosing to support investors instead of people that want a home to own and live in," said Yost.
In addition to the 970 properties in California, Arizona and Nevada bought by Colony Capital, the first round of bulk single-family home sales included 699 Florida properties sold to Pacifica Companies LLC and 94 Chicago properties purchased by The Cogsville Group.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.