The National Association of Realtors (NAR) has recently made suggestions designed to minimize the impact of distressed properties on local communities. According to the National Association of Realtors, inventory of real estate owned (REO) properties held by government agencies could be significantly reduced if additional resources were committed to loan modifications and short sales. They also suggested that the situation could be helped by improving access to affordable mortgage financing for both investors and homebuyers.
The NAR made their appeal 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. This letter also urged the agencies to develop an advisory board that will ensure that agency-owned REO properties will be properly and efficiently sold. This means not only supporting loan modification and short sale efforts, but also increasing the number and variety of financing opportunities. This, the NAR claims, ought to minimize taxpayer losses and reduce the negative effects that foreclosed properties may have on the local housing market.
Lack of Financing Hurts REO Property Sales
The National Association of Realtors suggests that the lack of appropriate financing opportunities is actually damaging REO property sales and general housing sales across the market. Many potential homebuyers have been discouraged by unnecessarily stringent underwriting standards, increasing fees, and a lack of private capital.
The NAR recommends that the best means of preventing further government agency-owned REO inventory increases is aggressive loan modifications. In addition, when homeowners are absolutely incapable of keeping their homes, agencies ought to consider a system of fast, short loan approval in order to minimize the damage.