September 5, 2012

The Honorable Gary Miller2349 Rayburn House Office BuildingWashington, D.C. 20515

Dear Congressman Miller, 

As a resident living and working in Southwest Riverside County, I am pleased to SUPPORT your bill H.R. 5823, the Saving Taxpayers from Unnecessary GSE Bulk Sales Program Act of 2012.

We have just lived through the deepest and most prolonged housing slump in history. Our region suffered one of the highest rates of foreclosure in the country for the past three years. But we are starting to climb out of that slump and our housing market is robust with strong demand, multiple offers above asking price and shrinking inventory. In just the past year we have gone from 60% of homes on the market being distressed properties to just over 30%.

We have very serious concerns with the design of the Federal Housing Finance Agency's (FHFA) “REO Initiative” pilot program.  We believe implementing this program as proposed would negatively impact the housing market in California and is counter to FHFA's role as conservator to restore the financial health of the Government Sponsored Enterprises (GSEs) and protect the taxpayer.   Given the current state of California's housing market, we can find no reason to include California in this pilot program. Our market is getting healthy on its own again, we can't afford any more government intervention.

According to our local Realtor® Association, local inventory of homes has dropped 62% just since January of this year and prices have been stable to slightly appreciating since January 2009. Local cities including Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar and Canyon Lake currently have salable housing inventories of 2 months or less.

Converting carefully selected REO properties into rentals might help reduce excess inventory in appropriately targeted areas, namely those with high inventory and low demand. However, counties in California do not reflect the market conditions required for the GSEs to benefit from such a program.  While Los Angeles and Riverside counties are included in the pilot program, they currently have a shortage of homes available for sale. This environment of high demand and low inventory is not appropriate for the REO pilot program. The GSEs have been able to minimize their losses on non-performing loans in our counties through the traditional foreclosure disposition process. As such, we see no reason to alter the current system in our county, as such an action would only harm the market and result in greater losses for the GSEs, and ultimately the taxpayer.

More fundamentally, we are concerned that including California counties in this initiative is in direct conflict with FHFA's duty as conservator to preserve and conserve the Company’s assets and property and to put the Company in a sound and solvent condition. In California, there is no question that disposing properties through bulk sales will yield a lower return for the GSEs and taxpayers than through traditional disposition methods. This means that such a program will increase losses to the taxpayer and GSEs and make it more difficult for homebuyers to find their American Dream.

For these and other reasons, we are pleased to SUPPORT your H.R. 5823. Please let us know what we can do to assist you in your efforts.

Sincerely,

Cc: (via fax)The Honorable Gary Miller 202.226.6962The Honorable Ken Calvert 202.225.2004 The Honorable Ken Calvert (District Office) 951.784.5255 The Honorable Joe Baca 202.225.8671The Honorable Duncan Hunter 202.225.0235The Honorable Timothy F. Geithner, Secretary Department of the Treasury 202.622.6415Mr. Edward DeMarco, Acting Director, Federal Housing Finance Agency 202.649.1071The Honorable Shaun Donovan, Secretary, Department of Housing and Urban Development 202.708.1455Mr. Moe Veissi, President, National Association of Realtors 305.665.1230

From a recent report from the Southwest Riverside County Association of Realtors:

On Market (Supply)

Pending Closed (Demand)

Days on Market Months Supply Absorption rate *

0

50

100

150

200

250

300

350

400

450

500

255

324

174

71

1.46551724137931

235

219

338

179

66

1.22346368715084

280

112

228

11589

0.973913043478261

371

152

345

184

82

0.826086956521739

376

7652

30

70

2.53333333333333

143

27

6742

62

0.642857142857143

467

Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar* Absorption rate - # of new listings for the month/# of sold listings for the month

One reason for suppressed sales numbers in Temecula and Murrieta is because we simply don’t have product to sell. Inventory has dropped 72% since February (2,240/841) Our months supply has dwindled from 4.2 months in January to 1.3 and our absorption rate has ballooned from selling .7 homes for every new listing in January to an average of 3.12 in July. Yes, Wildomar sold nearly 5 homes for every new listing on the market last month. And with pending sales remaining high, that trend will not reverse itself anytime soon.

The number of bank owned homes and short sales has fallen by half since January putting more emphasis on standard sales – up to 62% of the active market from 48% in January.

Southwest CaliforniaAugust Demand Chart