US Government Plans to Create Potter’s Field
CNN is reporting that the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA) are cooking up a pilot program to to sell foreclosed properties owned by Fannie May and Freddie Mac to investors IN BULK.
Investors might be required to build systems to allow management of thousands of properties – which they would then theoretically rent out. Large, qualified investors and investment firms (you know, like the ones that put us under in 2008) would be likely to participate.
According to CNBC “a number of institutional investors have shown appetite and interest in bulk REO deals, according to officials, but the plan has to incorporate ways to help facilitate financing. That has been one of the biggest roadblocks to deals already in the works between hedge funds and the major banks.” The bold emphasis is mine.
On CNN Thursday 1/12/12 one of those investor’s was quizzed about their ability to manage thousands of properties spread around the country. ”No Problem” was the answer, “we already have a system in place that centralizes our management processes”. Wait, am I wrong? I thought real estate was a local endeavor. Do I want the house next door to me managed from Wall street? I don’t think so!
What of the smaller Mom and Pop real estate investors – such as you or I? Will this government plan force local ownership to be a thing of the past? Will most of the foreclosures now be sold as part of these bulk sales, leaving none for the smaller investor or alas, even prospective homeowners? As a renter, do you want the firm managing your property to be hundreds or thousands of miles away?
Did you ever watch the show “It’s a Wonderful Life” starring Jimmy Stewart? In the movie Stewart is the 2nd generation owner of the local savings and loan association. He constantly battles against the local demagogue Potter for the rights of the towns people to own their own piece of the pie. In the alternate life Stewart’s guardian angel creates for him (showing him what it is like if he had never lived), people don’t own their homes. They live in ‘Potter’s field’ which is a collection of small, run down, shanty’s owned by Potter and rented to the locals.
Let’s not create a Potter’s field in our country by letting institutional investor’s control our housing!
Do you like this solution to the nation’s housing problems?