The Federal Housing Finance Agency (FHFA) has received criticisms from the California Association of Realtors (CAR) for pushing through with its planned bulk sale of foreclosed properties. The sale is part of an agency program designed to ease the REO inventory of the government-sponsored enterprise (GSE), Fannie Mae.
Realtors have argued that the move will be detrimental to the U.S. housing market, particularly now that inventory is tight in most areas. They claim that investors are benefitting from the deal at the expense of taxpayers and have called for a change of leadership within the FHFA.
Reactions to the Deal
A total of 970 distressed homes in Arizona, California and Nevada were sold to real estate investment firm Colony Capital on November 5, 2012. The company, which won the properties at a government auction, will pay $176 million to acquire the REOs and convert them into rental houses. According to the FHFA, it will help ease the oversupply in Fannie Mae's books without pushing back the recovery of the housing industry.
Realtor groups from Florida and California have expressed disagreement over the federal agency's reasoning, noting that demand for residential properties has picked up significantly during the year. They argued that the initiative is not needed now since industry dynamics are changing and the homes should have been reserved for would-be homeowners.
California realtors, in particular, have emphasized the severe shortage in housing supply in the state, which they say resulted in increased prices in most areas. They reveal that in the Inland Empire, the median selling rate of residential properties have gone up by 15% between February and September 2012.
Implication on Homebuyers
Opponents of the bulk sale have also called attention to the narrowing discounts offered for bank owned houses around the country. The nationwide foreclosure discount as of September 2012 is pegged at 7.7%, a decline from the 9% discount posted from the previous year. Data showed that in Las Vegas and Phoenix, two of the metro areas hit hard by the housing crisis, discounts for buyers of foreclosure homes were non-existent in September 2012.
Because homes are becoming more expensive compared with the past five years, critics of the bulk sale argue that low-priced housing units should be reserved for people who plan on using them as primary residences. This, they further claim, will help the recovery of the residential property market more and will benefit ordinary taxpayers, rather than big investment companies.
The post FHFA’s Bulk Foreclosure Sale Scrutinized appeared first on Bank Foreclosures Blog Foreclosure Information And Articles.