David Schweikert STALLS bipartisan California delegation bill in committee, would STOP anti-free market FHFA ‘bulk sales to rentals’ scheme in Cali

Part 2 in a series on David Schweikert’s taxpayer deception and his administrative manipulation of the real estate market

Today:  Schweikert abuses office, profits from position

On Tuesday, Politico Mafioso told the story of a new government 'bulk sales to rentals' housing program introduced by Fannie Mae & Freddie Mac’s conservator, the FHFA REO Initiative. 

In its first round of sales last week, this program bundled hundreds of foreclosed homes into packages which were sold to secretly approved investors in a shadow market.  The investors must rent out the homes for five years to "stabilize" local housing markets.  The REO Initiative was created by the FHFA with the help of Arizona Congressman David Schweikert. 

The most lucrative strategy for 2012 cash paying real estate investors is the “buy low & rent high” not the “buy anything & flip fast” model that significantly contributed to the run-up in housing prices before the bottom fell out of the market in 2008.

This is what makes the REO Initiative so attractive to investors, many of whom are similar to David Schweikert.  He has been a “buy low & rent high” real estate investor for years.  He’s not alone.

Like Arizona, California’s homeowners and real estate market took a big hit following the 2008 housing collapse.  In both states, many areas did not see much recovery or stabilization until early 2011, when Schweikert began his term in office.

Since then, each market has come alive as prices have increased as much as much as 30%.  In some areas, inventories of existing homes for sale have shrunk dangerously close to the low availability and high demand that fueled the housing bubble in the first place. 

Bidding wars for existing homes in Arizona and California communities are common place, especially for housing at lower price points.  Real estate investors routinely outbid willing homeowners in both the resale market and at trustee’s foreclosure auctions.  As mortgage loans remain tight, eager homeowners are shut-out of the most affordable markets, again.

Since the real estate free markets have been working so well in areas of Arizona and California, why would Schweikert and his subcommittee on Capital Markets and Government Service Enterprises join with the FHFA to expedite the implementation of the new REO Initiative (outside of the lawmaking process) instead of immediately stopping the investor’s rental program in recovering markets?

A bipartisan group of California’s congressional delegation, led by HouseFinancial Services Committee member Republican Gary Miller (CA-42) and the California Association of Realtors want to know why as well.

Time was of the essence, as the C.A.R. and Miller led the charge to save local California housing markets from the influx of millions of dollars in new shadow-investor owned rental inventory.  Miller knew the influx of desperately needed housing would drive up resale prices in the most affordable segments of the market. 

He also knew rental rates would disproportionately rise as thousands of displaced former homeowners clamor to get back into the market but are forced, once again, to compete with large investors for a piece of the single-family home market.  With no affordable homes available for purchase, everyone has to rent at increasingly unaffordable rates.

A taxpayer’s nightmare but an investor’s dream.

When collective questions and urgent letters from the delegation and C.A.R. were ignored by FHFA and Schweikert this spring, Miller swiftly crafted a defiant bill, HR 5823, titled Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012.

On May 17, HR 5823 was introduced in Miller’s Financial Services Committee.  Finally, on July 11, the bill was sent to slaughter in Schweikert’s Financial Services subcommittee, where his vice-chairman post affords him a platform to awkwardly say way too much while he exercises and masters his real motivation for being elected to Congress……Greed, power and influence.

David Schweikert is NOT a representative of the taxpayer but is a mole for institutional investors and capital market creators.

If Schweikert were truly a representative of his Arizona constituents, he would have written a copy-cat bill of HR 5823 using his vast knowledge of real estate markets, at least one year before Miller.  He did not.

He could have told his good friend, acting director of the FHFA Edward DeMarco, that the REO Initiative is totally wrong for Phoenix and parts of California, where resale prices have increased by 30% since Schweikert took office and the inventory supply is under two months.  He did not.

He could have said in one of his sappy poetic panel discussions in committee, “Hey guys, I don’t even need my calculator here.  Have you seen the new Discovery Channel show, “Property Wars”?  It’s filmed in Phoenix, Arizona. You might even see me in an episode or two.”  He did not.

David Schweikert could have preserved the integrity of the Arizona real estate market while also preserving his alleged but phony allegiance to the Club for Growth’s patron saint:  The Free Market.  He did not.

Instead, he chose to proudly declare his conflict of interest in a number of subcommittee meetings, too many to list here.  One exchange from March 31, 2011 stands out.  

"Mr. Schweikert. Mr. Chairman, Mr. Nielsen, and this

 is one of the concerns, because you are my brothers

 and sisters. I come from your industry. But I am being

 told that as much as 13 percent of our housing stock

 in this country is now empty."

While there may have been pockets of 13% empty housing stock in limited areas across the United States, Schweikert continued to betray his Arizona constituents over the next 17 months by intentionally ignoring the fact that our real estate market is in a state of recovery.  His deception will deprive Arizona taxpayers from becoming homeowners while the rental rates on his slumlord homes continue to rise.

On a rainy afternoon, read the formal records of Schweikert’s perverse questions and remarks to many of the panelists who appear before his subcommittee.  Then, pull up the committee hearing video and link the timeline to Schweikert’s verbal dissertations in the official record. 

Watching him under the spell of his own pathos is like a watching a congressional version of Shark Week, only more terrifying.  

Schweikert is not in a feeding frenzy to survive in the big ocean.  At age 50 and finally a congressman, he’s in a feeding frenzy to survive the self-inflicted pressure of those unfulfilled dreams, desires and ambitions that he will never attain because he will not allow himself to truly be free.  He’s a dangerous man.