NAR urges more short sales

In a letter sent to the US Department of Housing and Urban
Development, the Federal Housing Finance Agency, and the US
Department of the Treasury, the National Association of Realtors
(NAR) responded to the agencies’ recent request for input and
offered its recommendations for selling REO properties held by
Fannie Mae, Freddie Mac and the Federal Housing Administration.
According to NAR, improving access to affordable mortgage
financing for qualified home buyers and investors and committing
additional resources to loan modifications and short sales will
help reduce current and future inventories of real estate owned
(REO) properties held by government agencies. NAR urged the
agencies to create an advisory board as they explore new options
for selling foreclosed properties to ensure that efficiently
disposing of agency REO properties will minimize taxpayer losses
and reduce the negative effects that distressed properties have
on local real estate markets.

To prevent further REO inventory increases, NAR also recommended
that the agencies take more aggressive steps to modify loans
and, when a family is absolutely unable keep their home, to
quickly approve reasonable short sale offers that allow families
to avoid foreclosure. Phipps said that while federal programs
have been put into place to help keep families in their homes,
many of these have fallen short of expectations, and advocated
that those resources be applied toward modifying loans and
expediting short sales, which are typically less costly than
foreclosure. “Loan modifications keep families in their home and
reduce defaults, while short sales keep homes occupied, helping
stabilize neighborhoods and home values,” Phipps said.
“Expanding resources and ensuring the use of already allocated
funds for pre-foreclosure efforts is the best opportunity to
reduce taxpayer costs and creates more positive outcomes for
homeowners and their communities.”

NAR is also concerned about proposals that include lease-to-own
elements. Phipps said that agency policies should first be
focused on keeping families in their homes through loan
modifications or short sales if that’s a better option, and that
the agencies should not expedite foreclosures so that those
properties could be included in a lease-to-own program. He added
that any lease-to-own programs should not be administered by the
government, but instead should include the participation of
local investors or nonprofits that can manage the specialized
needs and challenges of the local market.