HomeMy WebLinkAboutCity Council Agenda Item No. 07CITY OF
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REPORT TO THE CITY COUNCIL
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: THOMAS P. EVANS, INTERIM CITY MANAGER
DATE: SEPTEMBER 25, 2012
SUBJECT: SUPPORT FOR HOUSE OF REPRESENTATIVES BILL 5823 (HR 5823):
SAVING TAXPAYERS FROM UNNECESSARY REAL ESTATE OWNED
BULK SALE PROGRAMS
Recommendations
Staff recommends the City Council consider H.R. 5823 and direct the City Manager to
submit a letter of support with the Mayor's signature to the Honorable Gary Miller's
office in Washington D.C.
Background
United States' Congressman Gary Miller (R- Diamond Bar) is underwriting HR 5823 in
an effort to save taxpayers from an unnecessary real estate owned (REO) bulk sales
program (REO Initiative Pilot Program) proposed by the Federal Housing Finance
Authority (FHFA). In addition to Congressman Miller, there are ten (10) additional
bipartisan co- sponsors to date; which include, Representative Ken Calvert (R-
Riverside /Corona), Representative Joe Baca (D -San Bernardino), Representative Judy
Chu (D -Los Angeles), Representative Susan Davis (D -San Diego), Representative
Dana Rohrabacher (R- Huntington Beach), Representative Brad Sherman (D- Sherman
Oaks), Representative Elton Gallegly (R- Camarillo), Representative Adam Schiff (D-
Pasadena), Representative Barbara Lee (D- Oakland), and Representative Zoe Lofgren
(D -San Jose).
In February of 2012, FHFA, Fannie Mae's conservator, announced a real estate bank
owned (REO) bulk sales program intended to bundle REO properties for sale to
investors who would turn them into rentals for a specific period of time. The program
would target specific market areas "hardest hit" by the foreclosure crisis. Market areas
for this program include Los Angeles /Riverside County, Atlanta, Chicago, 'Las Vegas,
Phoenix, and counties throughout Florida.
AGENDA ITEM NO. 7
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HR 5823 Letter of Support
September 25, 2012
Page 2
In May of 2012, House of Representatives Bill HR 5823 was introduced to prohibit the proposed
REO bulk sales program in California after the FHFA disregarded California lawmakers'
objections that REO bulk sales of homes to investors would create a negative economic impact
to California's recovering real estate market.
The California Association of Realtors (CAR) supports HR 5823 and opposes FHFA's REO bulk
sales program as well as the fact that they are refusing to disclose any details, such as
property locations, final property count, sales price, or names of winning bidders. CAR is
further concerned that outdated market data and valuations used by FHFA will devalue home
prices and hinder the real estate recovery in the Inland Empire, which has shown strong signs of
stabilization. Furthermore, because of the outdated price discrepancy and the nature of bulk sales to
investors, CAR believes Fannie Mae will not receive fair market value for the bundled REO
properties, thereby saddling taxpayers with their loss.
The Riverside County Board of Supervisors, the Cities of Temecula and Murrieta have passed
either resolutions or drafted letters of support regarding HR 5823. As of the writing of this report,
the City of Wildomar is in the process of voting to have the Mayor sign a letter of support.
Furthermore, the Southwest Riverside County Association of Realtors (SRCAR) has also
taken a position of support for this bill.
Currently, HR 5823 remains at the House Committee on Financial Services and no action is
specifically scheduled on HR 5823.
Fiscal Impact
Should HR 5823 fail, and the Federal Housing Finance Authority is successful in bundling REO
homes for sale to investors, it is anticipated property values in the City of Lake Elsinore would
be negatively impacted.
Prepared by: Justin Carlson
Management Analyst
Approved by: Thomas P. Evans /�
Interim City Manag�
Attachments:
1. House of Representatives Bill No. 5823
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1
112TH CONGRESS H
2D SESSION • Re 5823
To prohibit the Federal Housing Finance Agency from disposing of certain
real estate -owned of such Agency, the Federal National Mortgage Asso-
ciation, and the Federal Home Loan Mortgage Corporation, under the
initiative of such Agency for bulk sales of real estate - owned.
IN THE HOUSE OF REPRESENTATIVES
MAY 17, 2012
Mr. GARY G. MILLER of California (for himself, Ms. Cxu, Mr. Romt-
ABACmsR, Mr. CALVEIrf, Mrs. DAvis of California, Mr. SHERMAN, and
Mr. BACA) introduced the following bill; which was referred to the Com-
mittee on Financial Services
A BILL
To prohibit the Federal Housing Finance Agency from dis-
posing of certain real estate -owned of such Agency, the
Federal National Mortgage Association, and the Federal
Home Loan Mortgage Corporation, under the initiative
of such Agency for bulk sales of real estate - owned.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the "Saving Taxpayers from
5 Unnecessary GSE Bulk Sale Programs Act of 2012"
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2
1 SEC. 2. PROHIBITION ON DISPOSITION OF CERTAIN REAL
2 ESTATE -OWNED UNDER FHFA BULK SALES
3 INITIATIVE.
4 (a) PROHIBITION.— Effective upon the enactment of
5 this Act, the Director of the Federal Housing Finance
6 Agency may not dispose of any covered real- estate owned
7 that is located in the State of California under any initia-
8 tive for bulk sales of covered real estate -owned and may
9 not carry out such initiative with respect to covered real
10 estate -owned that is located in such State.
11 (b) DEFINITIONS. —For purposes of this section, the
12 following definitions shall apply:
13 (1) INITIATIVE FOR BULK SALES OF COVERED
14 REAL ESTATE- OWNED. —The term "initiative for
15 bulk sales of covered real estate - owned" means -
16 (A) the initiative of the Federal Housing
17 Finance Agency that -
18 (i) was announced in 2012, pursuant
19 to a request for information issued on Au-
20 gust 10, 2011; and
21 (ii) provides for qualified investors to
22 purchase pools of covered real estate -
23 owned; and
24 (B) any other program or initiative of the
25 Federal Housing Finance Agency, the Federal
26 National Mortgage Association, or the Federal
-HR 5823 M
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3
1 Home Loan Mortgage Corporation that is sub -
2 stantially similar to or substantially based on
3 the initiative identified in subparagraph (A).
4 (2) COVERED REAL ESTATE - OWNED. —The term
5 "covered real estate - owned" means real estate -owned
6 of the Federal Housing Finance Agency, the Federal
7 National Mortgage Association, and the Federal
8 Home Loan Mortgage Corporation.
O
•FIR 5823 IA
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