The California Association of Realtors (CAR) are up in arms over a new program by the Federal Housing Finance Agency (FHFA) that aims to buy large amounts of foreclosed homes and convert them into rental properties.
In a statement released by the group, they blasted the leadership of the FHFA and call for them to be replaced. According to CAR, “the implementation of the ill-conceived program highlights the failure of FHFA to appropriately address this issue despite CAR and others outlining alternatives. The botched execution of the REO bulk sales, and Home Affordable Foreclosure Alternatives and Home Affordable Refinance Program under FHFA’s oversight and leadership has demonstrated a lack of understanding of the housing market. Given these and other missteps, CAR believes it is time for a change in leadership at the FHFA.”
The goal of the program by the FHFA was to clear the market of foreclosed homes in the hopes that it would further bolster the housing market. But the leaders at CAR believe that it will have the opposite effect. They argue that the dynamics of the housing market have shifted and note that inventory is at an all time low.
They therefore worry that the FHFA is upsetting the balance of the market by removing homes that would otherwise be bought. This is not the first time that California realtors have expressed their concerns that too many foreclosed homes are being taken off the market. CAR voiced similar worries after Colony Capital purchased $170 million dollars worth of foreclosed homes from Fannie Mae and the FHFA in an auction.
LeFrancis Arnold, President of the California Association of Realtors, is concerned that the buyouts will further burden the middle class while it unfairly subsidizes Wall Street investors. “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 Arnold. He argues, “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.”
CAR is also concerned that the FHFA program may leave some prospective first-time homebuyers out in the cold. They believe that many of the homes being bought in these bulk sales are finally becoming affordable to those looking to buy a home for the first time. If these homes are hoarded until they further appreciate in value, then they may become out of reach for all of those prospective first time homebuyers.
Though CAR has expressed its concerns over the new program, the FHFA is sticking to its guns and remains encouraged by the pilot-program thus far. The program is merely an extension of a larger goal adopted by the FHFA to put foreclosed homes back into the marketplace in a way that would diminish losses.
