It’s hard enough being forced to seek foreclosure help in Orange County or Los Angeles. But what if you learned that foreclosure properties all over southern California were being sold in bulk to investors that helped create the housing crisis. What if the home you struggled to stay current on was offered for just pennies on the dollar to the politically connected?
Homes foreclosed on by HUD or Fannie Mae should be the property of the American people. But that’s not who’s benefitting from bulk sales by the Federal Housing Finance Agency. Roger Arnold of ALM Advisors in Pasadena was one of the first to bring national attention to this fraud in a RealMoney article in August 2011.
“These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value. You and I will not be allowed to participate.”
So while Southern Californians look for foreclosure attorneys in Los Angeles County or Orange County, and more fortunate homeowners seek opportunities to recover their losses, quality homes are being bundled into bulk sales to be purchased en masse by wealthy bidders. Despite stabilizing house prices and even the protest of Congressman Gary Miller, FHFA is moving ahead with the plan.
And why would institutional investors want these properties? The return on rental properties is one of the best investments out there. According to a Wall Street Journal story, the annual yield on rental property averages 6.3%, which certainly beats the yield of most mortgage and corporate bonds. And if you were permitted to buy the property at a massive discount, the deal is even sweeter.
Since 2008, FHFA has regulated Fannie Mae, making this a government sanctioned REO-to-rental program. With so many people seeking foreclosure help in Orange County as well as other counties across the nation, and investors profiting again off of the carnage, you may wonder whose side the regulators are on.
It’s bad enough that so many are forced to hit the reset button with the help of bankruptcy and foreclosure attorneys in Los Angeles and surrounding counties. But a practical investment arises and the opportunity is packaged up for connected elites in a sweetheart deal. Needed income is lost as well as revenue for the American public. And local home prices are hurt with so many units being unloaded cheaply.
After Southern California was announced as a potential site for a pilot program, the California Association of Realtors wrote a letter to California’s congressional delegation. They called the FHFA’s REO bulk sales unnecessary, since so many buyers were willing to pay higher prices. Despite so many seeking foreclosure help in Orange County, Los Angeles County and elsewhere in the region, they sited the fact that “many homes for sale, especially distressed properties, are receiving multiple bids. Removing REO inventory through a bulk sale and rental program will hurt these communities. In addition, the taxpayer will lose because these REO’s will be sold for less money in bulk sale than if sold as individual units.”
Some of the same interests that capitalized on the mortgage crisis are trying to make even more off homeowners. If you need help modifying your debt in order to keep your home out of the pockets of institutional investors, we can offer our expertise. And if you’re in the unfortunate position of needing a foreclosure attorney in Los Angeles or Orange County, Oaktree Law can help.