U.S. Senators Push for Quick REO Solution
In an effort to boost the economy, create jobs, and stabilize neighborhoods, 33 U.S. Senators are asking the Obama Administration and the Federal Housing Finance Agency (FHFA) to swiftly develop an efficient and effective real estate-owned (REO) management strategy to make better use of vacant foreclosed homes. Led by Sens. Jack Reed (D-RI), Tim Johnson (D-SD), and Bob Menendez (D-NJ), the senators wrote a letter to the U.S. Department of the Treasury, the U.S. Department of Housing & Urban Development (HUD) and the FHFA stating: “We urge you to analyze, quickly and diligently, the input you have received so that all REO properties under your control may be best managed to produce the most value for Fannie Mae, Freddie Mac and FHA. As part of this analysis, we ask that you also keep in mind the importance of looking for the most effective ways to stabilize neighborhoods and housing values.” With 10.4 million households in jeopardy of defaulting on their mortgages at the same time that the demand for rental housing is increasing, Americans are facing pressure on all fronts in the housing market. Since 2010, Sen. Reed has led a proposal to make better use of REO properties by converting vacant foreclosed homes into affordable, energy-efficient rental units. In August 2011, FHFA, Treasury, and HUD issued a formal Request for Information (RFI) soliciting public feedback and investor ideas for how to sell or rent REO properties. On Sept. 20, the Banking Subcommittee on Housing, Transportation, and Community Development, chaired by Sen. Menendez, held a hearing on “New Ideas to Address the Glut of Foreclosed Properties,” where expert witnesses testified that a more effective REO management strategy will help put us on a path towards greater economic stability. “There are too many foreclosed homes, many of which are unoccupied, and an increasing number of Americans who are in need of affordable rental housing," said Sen. Reed. "With the other side of the aisle seemingly embracing a 'let it fall' policy when it comes to legislative housing solutions, the American people still need creative, proactive strategies to fix the economy. Developing an innovative REO initiative could help turn lemons into lemonade by creating new opportunities for businesses and investors while simultaneously increasing the supply of rental housing and reducing foreclosures." Sen. Menendez said, "We need to fix the housing market to fix the broader economy, and getting the government’s foreclosed homes into people’s hands is a key part of that. We have explored this issue in my Housing Subcommittee. I remain committed to finding a solution, and I am encouraged that the Obama Administration is doing the same."