DS News - U.S. Bank

36 THE FHFA AGENDA: HOUSING FINANCE REFORM e Federal Housing Finance Agency (FHFA) released its 2018 annual Report to Congress, meeting the requirements of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. e report included commentary from FHFA Director Mark Calabria, encouraging Congress to act on housing finance reform while also requesting chartering authority similar to the Office of the Comptroller of the Currency. "ere is an urgent need for Congress to act on housing finance reform," Calabria said. "To promote competition in the marketplace, I encourage Congress to authorize additional competitors and provide FHFA the same powers as other federal financial regulators." Calabria also spoke on the GSEs, Fannie Mae and Freddie Mac, noting the need to put an end to conservatorship. "e Enterprise conservatorships were established as a short-term measure to address instability and ensure market function during the financial crisis," Calabria noted. "ey are now of unprecedented duration and scope and leave the mortgage market, and American taxpayers, vulnerable to another market downturn. FHFA will set an ambitious agenda that ensures that the mortgage market and FHFA's regulated entities do not return to pre- financial crisis business models." Calabria had previously discussed his desire to take the GSEs out of conservatorship, and in an interview with the Wall Street Journal, stated that he wants to out the now-profitable GSEs back into private hands, something that has been tried and failed by lawmakers in the past. "I see my goal as setting a path to end the conservatorship" for the companies he said, adding, "they have to be stronger, healthier companies" compared to before the 2008 housing crisis. "My objective is to get us to a spot where we don't have to worry about the system blowing itself up," Calabria said. e FHFA's report includes several recommendations to Congress, including acting on housing finance reform, increasing competition, and strengthening the FHFA's regulatory powers. THE CHALLENGES OF INVESTING IN FORECLOSED PROPERTIES For investors, buying foreclosure properties is always a risk. In a post on Forbes, Chris McAllister, Founder of Real Estate Brands Ltd., discussed the different methods by which investors can secure foreclosure properties, noting what to look for and the pros and cons for each. "ere are a lot of misconceptions out there about what it takes to get a great investment property at the best possible price," McAllister said. "In my experience, foreclosed properties have always offered the most house for the money. ese purchases, however, are more complicated than buying a house from a private seller, and often not for the faint of heart." Foreclosure auction, or sheriff sales, are considered "hit or miss," according to McAllister. He notes that at these auctions, the foreclosing banks will often bid the price up to buy it and eventually place it on the market as an REO property. Additionally, McAllister notes that sheriff sales often mean buyers do not get to see the property before purchase. McAllister also points out that short sales have been waning in popularity in recent years, and rarely result in better deals. e best method, McAllister says, is the multiple listing service (MLS). rough MLS, investors can find postings from all the major government players including the Department of Housing and Urban Development (HUD), Fannie Mae and Freddie Mac, as well as properties from investment firms looking to sell properties they purchased as part of pool sales will list with local real estate firms. What "makes or breaks" the REO purchase process will be your REO agent, McAllister argues, and the best agents have a strong understanding and inside knowledge of what is on the market at all times. Outside of the traditional methods, new technology coming to the foreclosure market is making investing more straightforward. According to a recent Gallup poll, 35% of Americans believe real estate to be the superior long-term financial investment, compared to 27% who say stocks are the better investment. For real estate investors, tech apps which allow for remote bidding could provide a quicker way to take advantage of the rising positive sentiment toward real estate as an investment. Additionally, many current homeowners (around 1 in 10) say they would prefer going back to renting over owning, according to Gallup's research, which could be a boon for single-family rental investment.

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