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FHFA Reveals 3rd Winner for REO Initiative, C.A.R. Voices Disapproval

The ""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA) announced a third bidder scooped up properties in three states for the agency's REO-to-rental initiative, leaving Atlanta as the sole metro in the program with no winning bidder.


""Colony Capital, LLC"":http://www.colonyinc.com/index3.html purchased 970 properties in Los Angeles and Riverside, California; Phoenix, Arizona; and Las Vegas, Nevada, the agency revealed Thursday. Colony Capital is a private real estate investment firm based in California.

The agency's REO initiative seeks to sell Fannie Mae foreclosures to institutional investors in hard-hit metros. The investors will then convert the foreclosures to rental units.

The 970 properties purchased by Colony Capital include 1,176 units, 752 of which are occupied, according to the ""transaction summary"":http://homepath-activedt.netdna-ssl.com/content/pdf/structuredsales/SFR_2012-1_USWest/SFR_2012-1_US_West_Transaction_Summary_11-01-12.pdf. Out of the 970 properties, 432 are in California, 328 in Phoenix, and 210 in Las Vegas.

The estimated transaction value to Fannie Mae for the purchase was $176 million, and the third party valuation for the property was $156.8 million, according to the summary.


The purchase price represents 112.3 percent of the value of the properties.

Previously, FHFA announced ""Pacifica Companies, LLC purchased"":http://dsnews.comarticles/first-winning-bidder-announced-for-fhfas-reo-bulk-sale-2012-09-10 699 Fannie Mae properties in Florida, while the ""Cogsville Group, LLC bought"":http://dsnews.comarticles/cogsville-group-acquires-94-chicago-properties-through-fhfa-pilot-2012-10-02 94 properties in Chicago.

In California, the program was met with opposition by ""lawmakers and the California Association of Realtors"":http://dsnews.comarticles/lawmakers-say-gses-reo-rental-initiative-isnt-for-california-2012-04-10 (C.A.R.). The groups argued that the program was not necessary in the state to clear out REO inventory.

In a statement Monday, C.A.R. didn't hold back from voicing its opinion on the matter and stated, ""Fannie Mae and FHFA’s decision to move forward with the REO bulk sale in California amounts to another gift to Wall Street at the expense of taxpayers.""

The association asserted the transaction will not only hurt taxpayers and prospective homebuyers, but will also delay a full recovery in the housing market.

C.A.R. also called for a change in leadership in the FHFA, stating the ""botched execution of the REO bulk sales, and Home Affordable Foreclosure Alternatives (HAFA) and Home Affordable Refinance Program (HARP) under FHFA’s oversight and leadership has demonstrated a lack of understanding of the housing market.""

According to data from C.A.R., the median home price in the Inland Empire, or the Riverside-San Bernardino-Ontario metropolitan area, has risen 15 percent to $198,270 in September from $172,000 in February 2012, while unsold inventory is down to 3.8 months. The median home price in Los Angeles has increased 37 percent to $373,020 in September during the same period, and inventory is down to 3.7 months.

About Author: Esther Cho


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