The Senate Subcommittee on Housing, Transportation, and Community Development used a September 20 hearing to get ideas to address the glut of real estate-owned (REO) or lender-owned properties that have been foreclosed.
The hearing featured debate over the benefits and drawbacks of using bulk sales to dispose of the properties, which the Federal Housing Finance Agency (FHFA) suggested in an August 10 request for information. Allan Decher of the National Association of Realtors and Bob Nielsen of the National Association of Home Builders testified that bulk sales could limit the opportunity for community-minded buyers to participate in REO sales programs. Other witnesses said they are necessary to draw investors.
“The difficulty of buying up sizable blocks of distressed properties inhibits large scale investors from participating in the market,” said Laurie Goodman of Amherst Securities. “In order to build out a rental organization, which includes rental agents and property managers, it is critical to obtain a critical mass of properties in a given area.” She urged FHFA to bundle properties within a metropolitan statistical area and conduct an auction on an all-or-none basis.
Noting that the federal government subsidizes homeowners through the mortgage interest deduction, Senator Jeff Merkley (D-OR) said REO properties should be used to assist lower income families achieve home ownership. NLIHC has urged the Administration to ensure that at least a portion of the properties be used as rental housing affordable to extremely low income (ELI) households.
The hearing webcast and witness testimony are available at: http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=16fe36f4-a0d1-4ef1-9a19-94a2a9f85e1a