A plan to sell hundreds of foreclosed homes in California all at once would negatively impact California’s housing market and raise costs for taxpayers, says California Congressman Gary Miller (R-Brea).
Miller and 18 other members of Congress from California last week wrote to the agency in charge of the sale, the Federal Housing Finance Agency, and objected to the planned bulk sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties.
In bulk sales, large investors get big discounts for buying hundreds of homes at once. Those discounted sales prices can push down the values of surrounding homes, hurting the neighboring home owners. Currently, Fannie Mae sells its foreclosed homes to individual home owners and investors. When bank-owned homes are sold to individuals, the homes sell for market rates, which keeps up home values for neighbors.
The CALIFORNIA ASSOCIATION OF REALTORS® says Fannie Mae doesn’t need to sell its foreclosed homes in bulk deals because the inventory of homes for sale there is extremely low and buyers are plentiful. Home buyers in most of California’s markets are experiencing multiple offers, including for distressed and foreclosed properties, CAR officials say.
According to CAR 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.
“This program may be a viable solution in states where there is a large inventory of unsold foreclosures. However, carrying out this plan in California would potentially further delay a housing recovery and, ultimately, result in greater losses for the taxpayer,” says CAR President LeFrancis Arnold.