Readers will recall we are fighting Freddie Mac’s plans to sell locally foreclosed homes to private investors in bulk sales. That squeezes our already low inventory, and shuts out ordinary home buyers. In direct opposition to Freddie’s own stated mission:
Our mission and vision are based on long-standing values that inform the work we do at the Freddie Mac Foundation. We believe:
families who are struggling can thrive when they are supported within healthy communities with adequate and safe housing with comprehensive services;
the best place for any child is a safe and stable family;
even the most vulnerable of families can thrive;
all children and youth have potential and can succeed in school and later in their careers.
The two children in my client’s family may remain renters if their offer to purchase a Freddie Mac foreclosed home in Shasta Lake City falls through because of a bulk investor sale. I think they’ll be fine. Having a good family matters more to kids than housing. But this local bulk sale policy of Freddie Mac makes a mockery of their “mission statement.” Complete and inarguable hypocrisy.
Readers will also recall we enlisted Congressman Herger’s office for help. Rachel Alexander gives me regular updates, even if there is nothing to report. This sale is taking place behind closed doors. Sweet deal for somebody. Somebody wealthy and influential.
“Thanks, Skip. I will be in touch when I get a response from Freddie Mac. Please let me know if they contact you directly.
Rep. Wally Herger (CA-02)
14 days now since we first contacted our congressman in an effort to get relief from this sale. Still no word from Freddie Mac. Will keep you all informed.
Meanwhile, weep with us for the irony of this Freddie Mac video pointing out how good the rates are right now. If only they weren’t selling the few available local REO houses to insider investors.
While I might ordinarily be skeptical of a special interest group putting pressure on a bureaucrat, in this case the actual special interest group is first time home buyers. This is not an academic policy question. This is affecting real people in our community.
“LOS ANGELES (Nov. 5) – The following is a statement by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) on last week’s announced REO bulk sale transaction between Fannie Mae, the Federal Housing Finance Agency (FHFA) and Colony Capital:
“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 C.A.R. President LeFrancis Arnold. “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.”
The implementation of this ill-conceived program highlights the failure of FHFA to appropriately address this issue despite C.A.R. and others outlining alternatives. The botched execution of the REO bulk sales, and Home Affordable Foreclosure Alternatives (HAFA) and Home Affordable Refinance Program (HARP) under FHFA’s oversight and leadership has demonstrated a lack of understanding of the housing market. Given these and other missteps, C.A.R. believes it is time for a change in leadership at the FHFA.”
C.A.R. opposes bulk sales in California because the state is experiencing a severe shortage of available housing, which will negatively impact the state’s housing market. The median home price in the Inland Empire is up 15 percent from $172,000 in February 2012 to $198,270 in September, and unsold inventory is down from 5.3 months to 3.8 months during the same period. The median home price in Los Angeles has risen 37 percent from $272,920 in February 2012 to $373,020 in September, and inventory is down from 5.7 months to 3.7 months.
Readers will recall I have a client trying to buy a Freddie Mac owned house listed for sale locally. We are being told the home is now tied up, possibly pending sale to an investor as part of bulk home sale. The bulk home sale was a policy designed to alleviate excess REO inventory in certain markets. We are very low on inventory here, so this was a shocking development. I asked for intervention from Congressmen Herger’s office, and this memo just received from his staff is an important update.
Skip, Per our conversation earlier this week, I wanted to let you know that I received an initial response from FHFA. The agency was firm that it is not operating the Real Estate-Owned pilot program, which sells properties in bulk to investors, in Northern California. That program is, in fact, limited to the hardest hit metropolitan areas – Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida. However, Freddie Mac may be operating its own initiative(emphasis mine, ed.) and FHFA has reached out to Freddie Mac to get some answers. I will be in contact with further developments.
Have a good weekend!
Rep. Wally Herger (CA-02)
242 Cannon HOB
Washington, DC 20515
To sign-up to receive Congressman Herger’s regular e-mail updates, please click here.
Wouldn’t you like it if some government agency sold you valuable inventory under the table, without any external oversight? Let’s hope this is not happening here.
As usual, I will keep you all informed of any new information.
Well, at least one congressman. Readers will recall we asked our congressman Wally Herger to try and help stop my client’s (potential) home from being taken out from under them, and sold to an investor in a bulk sale. Such an insider sale would harm my clients, and the action seems directly in opposition to the housing mission of Freddie Mac. Well, today I got a call from Rachel Alexander in congressman Herger’s Washington office. She apologized for the delayed response. It seems they’ve been struggling out there with a little thing named Hurricane Sandy. Perfectly understandable. Anyway, she said she had a message in to the Federal Housing Finance Agency (FHFA), which has authority over Freddie Mac. She anticipated that we should have an answer back in a few days. That would be terrific.
She said it was her understanding that the bulk sales were to apply only to the hardest hit areas, perhaps Florida or Las Vegas, where there were simply no other homebuyers. That certainly isn’t the case here! We have buyers, and no homes to sell them. I pointed out that just a while back there were often over 250 foreclosed homes for sale around here, but today the total number of available REO inventory was just 87 homes. That’s not many when spread out across our large region. Meanwhile the pace of foreclosures have hardly slowed at all, yet we have few REO homes for sale. Foreclosing and then selling homes in bulk to investors is only making our local housing market worse off.
So hopefully we’ll hear something from FHFA soon. Some good news perhaps, good for my first time homebuyers. It’s understandable that such an oversight might occur given the size of the problems that our government faces, having inserted itself so deeply into the housing market. But hopefully common sense will prevail in this issue. We’ll keep you informed.
We were about to go up the chain, to Senators Feinstein and Boxer, but both of them wanted the request by mail (!). Welcome to 1991, senators. So, kudos to congressman Herger for being more accessible. Rachel indicated they would be working as hard as possible even though their office is winding down, as the congressman is leaving office. This episode brings focus to how important the upcoming election can be to real people trying to effect real change in government. So please exercise your duty to educate yourself about the candidates and choose wisely.
None, so far. Readers will recall I have clients who may require government intervention on their behalf to prevent a Freddie Mac foreclosed home they have offered to purchase from being sold to a private investor group. We went to our representative’s website, and sent him an email message, asking for help. So far we’ve been waiting for any kind of confirmation of receipt. Waiting this long:
6 months,27 days,15 hours,2 minutes ago
We weren’t sure what to expect, of course. So we’ll keep an open mind. Also, we saw in the news that Congressman Herger was busy at a ribbon cutting ceremony yesterday for a giant corporation. So he’s busy. And my clients aren’t giant corporations. They are just working people who want to buy a home in their community. Our community. A home foreclosed on by the government. And then offered for sale locally, only to be “pulled” for a bulk sale. Or so it is threatened. Let’s hope we get intervention soon.
Meanwhile, here’s a video from Freddie Mac, explaining the reason they exist. No mention is made of their seizure by the US Treasury in September 2008.
This isn’t some academic problem. I have real buyers, first time buyers, who are being told that they may not be able to purchase a foreclosed Freddie Mac home on which they have made a good offer because it is being considered now to be pulled from the market for a bulk sale to an investor buyer. With our severely reduced local housing inventory, this policy can only harm first time homebuyers. Buyers who may now be seeing some of the best prices and lowest interest rates of their lifetime. How can this policy possibly square up with the purpose of our U.S. Treasury owned Freddie Mac organization? Do we taxpayers maintain Freddie Mac (“to the current tune of almost $142 billion”) to serve homebuyers or investors? It’s a serious question, and one which I posed today to my representative in congress, Wally Herger.
I’ve never asked Congressman Herger for any favors before, so I have no idea what results I may expect. As I understand it, he has been in Congress for a very long time, and so should have some influence. We’ll find out. I’ll keep you informed of his response.
Here’s an interesting interactive map of real estate related statistical data as it applies to individual Congressional Districts.
The 2nd Congressional District ( us) has almost 300,000 households, with a 64% rate of homeownership. It’s sometimes easy to forget how big this district is, so much more than just Shasta County. As of yesterday, the 2 candidates running to represent this region are Jim Reed and Doug LaMalfa. There is much more real estate related demographic and economic data at the link. Interesting to see how we compare to other places.
We Realtors were very concerned about proposed added level of state government regulation with new rules over septic systems. Basically, it would have imposed very expensive testing at point of sale for all the septic systems around the Shasta County region. Recently, the state issued the current map that illustrates those problem areas, and we aren’t on it. That makes the septic rule changes irrelevant to us. Click on the map to go to the actual page.
Click to go to actual current map
Of course the map can change, and those rules may be enforced here. There are a few areas I can think of where the density of septic systems and proximity to freshwater streams and bodies of water may become an issue. And in that case, enforcement of these rules may become necessary anyway.
State bureaucracy sounds pretty negative until you find your well water has been contaminated by somebody else’s sewage.
We’d heard this at the Shasta MLS. Here’s an article seeming to confirm it. Right now, Freddie and Fannie clerks hand out REO homes to individual brokerages to sell, in a classic unpublished no-bid contract. Under this idea, they will instead sell the homes to investors in a pool to be used only as rentals, not re-sold. At least not flipped for some period, which we heard was 5 years. It’s all being done very quietly, as usual. Maybe the concept is a good idea, but chances are you won’t be hearing much discussion either way. That’s how things work when it comes to government housing policy. Shh.
“FHFA says prospective investors must agree to keep certain information about the REO and related matters confidential.”Democracy at work. Click on the article for more.
The UN estimates the human population will reach and exceed 7 billion today. “U.N. forecasts suggest the world population could hit a peak of 10.1 billion by 2100.” I imagine they’re going to need housing, so bonus for me. Here’s the Halloween scary part though, “it was just over two centuries ago that the global population was 1 billion — in 1804.” Back then, even this guy, Robert Malthus was concerned. Wonder what he’d think today? Happy Halloween indeed.