NAR Calls For REO Sales Limits

The National Association of Realtors (NAR) is reaching out to policymakers in an effort to limit how many REOs are purchased by large institutions. In 2011 the number of REOs purchased only for investment purposes increased by 64.5 percent. Many of those REO sales were made by large financial institutions who want to increase their profits via rentals. NAR doesn’t think this is good news for the housing industry or for the community.

Mario Viessi, the President of the NAR urged policymakers and lenders to focus on expanding borrowing opportunities for qualified homeowners and smaller investors.

“More must be done to expand the availability of financing for qualified home buyers and investors to help draw down REO inventory rather than focusing on programs that could line the pockets of Wall Street companies and financial investment firms,” said Veissi.

Viessi also spoke out against Bank of America’s recently announced “mortgage to lease” program.

“Realtors believe pre-foreclosure efforts should be intensified to help reduce the number of properties that end up as REOs,” said Veissi. “We hope that efforts will remain focused on keeping families in their homes as homeowners, rather than on programs that consolidate hundreds or thousands of properties into rentals and require large financial institutions to act as landlords.”

Viessi is right; we need more financing for small investors and individual buyers who don’t have cash. Last year forty-nine percent of REOs purchased by investors involved cash. Most small investors and individual homeowners are unable to purchase REOs for cash. Without the proper amount of financing available for REO purchases, we may see even more large investors dominate bank owned properties.