Lawmakers in California have set out to prevent investors taking advantage of the recently proposed ‘REO to Rental’ program from, which would allow buyers to snap up foreclosed homes in bulk, on condition that these homes are then rented out for a stated period of time.
Gary Miller, a Republican, is sponsoring a bill known as H.R. 5823, or the ‘Saving Taxpayers from Unnecessary GSE Bulk Sale Program Act of 2012”, together with seven other co-sponsors, reports Inman News.
The California Association of REALTORS was quick to applaud H.R. 5823, after having previously spoken out against the REO bulk sales program, which would allow investors to snap up blocks of Fannie Mae-backed homes that have fallen into foreclosure.
LeFrancis Arnold, the president of CAR, said that the REO bulk sales program would only hurt genuine home buyers, who already face stiff competition from investors.
"We are hearing from our members that housing supply is extremely tight, with REO inventory being especially low at only a two-month supply," explained Arnold.
CAR housing data shows that the majority of bank-owned homes in the state close within 60 days of coming on to the market, and many of them are sold for prices above going rates.
The H.R. 5823 bill comes after the Federal Housing Finance Authority (FHFA) apparently ignored a letter from California lawmakers sent on April 19, which outlined their objections to any REO bulk sales program in the state.
The FHFA first announced its bulk REO sales program back in February of this year, setting aside almost 2,500 of its REO homes for sale in selected markets, including Los Angeles-Riverside, California; Atlanta, Chicago, Las Vegas, Phoenix and several parts of Florida.