The government needs to make a priority of reducing the housing glut by making it easier to buy a home. That’s the message from the Mortgage Bankers Association to the Federal Housing Finance Agency.
MBA chairman David Stevens made a bunch of points in a letter to FHFA acting director Edward DeMarco. In rough and colloquial terms:
- There is a lot of housing inventory.
- A lot of that is composed of foreclosure and REO sales.
- Figuring about a million foreclosure and short sales per year, it will take almost four years to get through that inventory.
- First-time and minority home buyers are the traditional engine of home purchases, but they ain’t around right now; “For the time being, the country cannot rely on these populations to fuel the housing recovery.”
- We gotta get rid of this excess inventory if we want the market to stabilize.
- The best long-term solution is to get those properties in the hands of owner-occupiers who will have “the largest incentive to rehabilitate and maintain the homes.”
- The next best thing is to get them in the hands of local investors in a “clear, transparent, and equitable” process with safeguards.
Existing government programs should be modified to support financing and availability for local investment. Providing affordable, responsible financing options to investors not only eliminates REO properties, but also empowers neighborhoods by giving local residents an increased stake in its success.