Edward DeMarco continues to come under heavy criticism for his opposing the housing policies adopted by other entities, on Fannie Mae and Freddie Mac. He is the acting director of FHFA – the body that regulates the duo.
The members of California congress are annoyed with his new plan of bulk selling over 600 foreclosed houses in the counties of Los Angeles and California to investors provided they convert these into rentals. The plan is included in a bigger programme to dispose off in this manner, nearly 2,500 units owned by Fannie Mae – some houses being vacant while others are occupied. These houses are located in some of the worst foreclosure hit zones of the country.
Nineteen legislators said that this measure would further harm the real estate market and increase expenses for ordinary citizens. Three of the legislators are from San Diego. In a letter sent to DeMarco on 4th April the letter stated, “Converting carefully selected REO properties into rentals might help reduce excess inventory in appropriately targeted areas, namely those with high inventory and low demand. … However counties in California do not reflect the market conditions required for the GSE’s to benefit from such a program”.
DeMarco has argued that the plan will improve those areas worst hit by the crisis. He said it would be a significant step towards stepping up investment from the private sector. It will simultaneously stabilize communities and increase value of properties. He expressed his gratefulness to the big investors and non-profit groups as well as officials of the local and state governments that had helped him to bring about this initiative.
The CAR or California Association of Realtors had tried hard to block this programme of Fannie even prior to it being officially announced. The association had expressed its fears to a delegation of California congress. It was concerned that the regulators had not properly analyzed the cities where this pilot project was to kick off. In these areas there is a shortage of foreclosed houses that has led to competitive bidding. These neighbourhoods would be hurt if bulk numbers of REOs were sold and rented. The taxpayer too would lose out because in a bulk sale the houses would be sold for relatively less amount; individual sale would have fetched more money.
Facing political pressure from the officials in the government is not something new to DeMarco. Recently Kamala Harris, the Attorney General of California had asked him to halt the sale of GSE owned properties until write down of principal had been completed.