Congressman Gary Miller

Andrew Edwards, Staff Writer
Created: 04/23/2012 08:27:17 PM PDT

Rep. Gary Miller, R-Brea, and several other inland legislators are asking the Federal Housing Finance Agency to stay out of Southern California while testing a pilot program in which foreclosures would be sold in bulk to institutional investors.

In an April 4 letter, which Miller and other members of Congress sent to the FHFA’s acting director, Edward DeMarco, the legislators contend the proposal would weaken the housing markets in Los Angeles and Riverside counties, where the government plans a trial run of bulk sales.

The legislators’ argument against the bulk sales proposal largely rests on the idea that a sufficient number of buyers are willing to make offers on foreclosed homes in Southern California, so any bulk sales might have a negative effect on the markets in Los Angeles and Riverside counties.

“As such, we see no reason to alter the current system in these counties, as such action would only harm the market and result in greater losses,” the letter reads.

Rep. Joe Baca, D-San Bernardino, Rep. Jerry Lewis, R-Redlands, and other House Democrats and Republicans signed the letter in addition to Miller, whose name appears first.

Miller also represents the West Valley area in Congress.

The FHFA, which administers the government-sponsored mortgage investors Fannie Mae and Freddie Mac, did not provide a comment on Miller’s letter.

The FHFA announced the pilot program in February as a means to dispose of Fannie Mae-owned foreclosures in the United States’ “hardest hit” real estate markets.

Besides Los Angeles and Riverside counties, the FHFA considers those markets to be Atlanta, Chicago, Las Vegas, Phoenix and parts of Florida.

In Los Angeles and Riverside counties, the pilot program would result in the sale of 663 homes and multifamily units.

The FHFA stated at the time the pilot program is intended to put foreclosed properties in private management and meet a demand for rental housing, as homes sold through the bulk sales program would be required to be put up for rent for a specified number of years.

The legislators’ letter in opposition to the program puts the signatories on the side of the California Association of Realtors, which maintains bulk sales are unneeded in the face of dwindling inventories.

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