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REALTORS® applaud the recent move by California Congressional members opposing the implementation of REO sales in California. Implementing the Federal Housing Finance Agency (FHFA)’s “REO Initiative” pilot program in California would negatively impact the state’s housing market and increase losses to taxpayers and the GSEs, according to California’s REALTORS® and legislators.

Congressman Gary Miller (R-Brea), along with 18 other members of California’s congressional delegation, issued a letter last week to Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), urging DeMarco to refrain from implementing the agency’s “REO Initiative” pilot program in California because it would negatively impact California’s housing market and raise costs for taxpayers. The REO Initiative pilot program calls for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties to institutional investors. 

REALTORS® believe the pilot program is not beneficial to the California market because housing inventory is extremely low and demand is high. Home buyers in most of California’s markets are experiencing multiple offers, even for distressed and foreclosed properties. According to data from the California Association of REALTORS®, sales of bank-owned homes are closing in an average of less than 60 days – and often above the list price – without government intervention.

“We commend the California congressional delegation’s letter to Mr. DeMarco,” said LeFrancis Arnold, C.A.R. president. “Carrying out this plan in California would potentially further delay a housing recovery and, ultimately, result in greater losses for the taxpayer.”

The latest National Association of REALTORS® report on second homes indicates investment home purchases represented nearly one-third of all existing-home sales last year. NAR says this robust investment activity underscores the importance of limiting the government’s use of real estate owned (REO) bulk sales. The 2012 NAR Investment and Vacation Home Survey shows investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010.

“Silicon Valley is experiencing a high demand for homes, resulting in multiple offers due to the very low inventory,” said Silicon Valley Association of REALTORS® President Suzanne Yost. “We believe policymakers and lenders should instead focus on expanding the availability of financing for qualified home buyers and investors and intensify pre-foreclosure efforts to keep families in their homes.”

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.