On August 10, 2011, the Federal Housing Financing Administration, Treasury, and Department of Housing and Urban Development issued a joint Request For Information (RFI) "seeking input on new options for selling [250,000] single-family real estate owned (REO) properties held by Fannie Mae and Freddie Mac, and the Federal Housing Administration."
REO properties are casualties of the real estate bubble and already failed to sell at foreclosure auctions. The federal government owns half of all REO properties in the country as a result of taking over Fannie Mae and Freddie Mac. REOs are concentrated in poor neighborhoods that have some of the nation's highest foreclosure and unemployment rates.
What we decide to do with these public assets represents a choice with huge ramifications: do we use them to address the needs of the communities hardest hit by the "Great Recession" or do we bulk-sell them at severely discounted prices to private investors who are looking to convert them into lucrative rentals?
The stated goal of the RFI is to enhance "market outcomes" and "reduce taxpayer costs, stabilize neighborhoods, and respond appropriately to market demands." The RFI specifically solicited ideas from "market participants" on how to pool REOs in specific geographic areas to "maximize economic value." This is policy talk for making the housing market profitable again for banking, finance, and real estate interests.
The likelihood that this process will benefit financial institutions that can bring billions of dollars to each transaction - some of the very same speculators responsible for the mess we're in to begin with - is high unless communities across the country take a stand and demand that the federal government use these homes for the public good rather than private gain.
In RealMoney, Roger Arnold explains why the RFI process is problematic:
"In reality, the RFI is a way for the members of Congress to find out if they can get away with bulk-selling these homes to private companies without incurring the wrath of their constituents, taxpayers and former owners of the properties...
The way to keep taxpayers from pushing back is to structure the RFI so that the real intention, the bulk sales, is masked by feel-good goals, such as stabilizing neighborhoods and increasing the supply of rental properties."
This is the time to move beyond sweetheart deals and open up our federal housing policy to rigorous public debate and scrutiny. We must rethink the market ideology that has dominated policy since the 1970s, valuing profit over people and leaving millions of families and individuals homeless or on the brink of losing their homes. If we don't act now, we run the very real risk of condoning the huge transfer of public wealth to the private sector and worsening inequality.
To this end, WRAP supports the RFI applications submitted by our allies at the Campaign to Restore National Housing Rights and Causa Justa::Just Cause (click HERE to read CRNHR RFI and HERE to read CJ::JC RFI). These applications raise important recommendations for keeping people in their homes and connecting empty REOs to real jobs and housing programs for communities suffering most from unemployment, foreclosures, displacement, severe rent burdens, and homelessness.
It is time we put an end to the federal government selling off precious publicly owned housing stock and reinvest in people and housing as a human right, not a commodity!
(Image Credit: Jos Sances)