The government is investigating new plans to try and limit the number of foreclosures going onto the market in an effort to prevent unsold foreclosed homes damaging values even more – by simply renting them all out instead.
The Wall Street Journal reported that the Obama administration is currently examining the viability of pulling foreclosed homes from the market, at a time when rents are steadily increasing and values continuing to fall. The idea is that lenders would be able to take advantage of increased rents to cover costs while keeping hold of foreclosed properties until real estate markets stabilize again.
Lenders might even be able to make a profit on the eventual sales if renting works out, say experts.
While the talks are only at a conceptual stage, the government realizes there is a pressing need for them to come up with a plan, as distressed home sales continue to be sold at huge discounts, plaguing real estate markets. According to Federal Reserve Chairman Ben Bernanke, taking a number of foreclosed properties off the market “is an idea worth looking into”.
Analysts at the Credit Suisse financial firm estimate that even by just reducing the number of foreclosure sales by Fannie Mae and Freddie Mac to 30,000 a month (they currently sell 50,000 per month) would amount to a one-third reduction in distressed property sales.
Such a move would help to prevent an expected 3% to 5% drop in home values, Credit Suisse estimated.
One of the biggest stumbling blocks to the plan of course, is that renting out foreclosed homes would place the government and mortgage lenders into the unaccustomed role of playing landlords – although this too would perhaps be beneficial as a way of creating jobs, as there would surely become a need for property managers to take control of these new estates.
Alternatively, rather than lenders or the government renting out homes directly, another plan is to encourage investors to buy up foreclosed properties at discounted prices in exchange for agreeing to rent them out rather than try to flip them. Investors could then use the services of property management firms to handle the day-to-day aspects of handling tenants.
I think it is a wonderful idea. Perhaps they might want to also look into a rent to own program too. There are alot of people out there looking for good quality homes. If they entered into such a program they could then work with the bank on meeting the requirements to purchase the home while they are renting it. I say go for it. The sooner this happens the better!
Oh that will definitely help boost the housing for sure.
Totally insane, what is happening all over.
I predicted this would happen about 2 years ago. All middle class America ever had or wanted was a home to call their own. It is and always has been the dream that kept the country running.
Now the top one percent has taken it away but they will rent your dream back to you on a month to month basis. The reason both political parties can't find common ground on the economy is so long as over 90% of America is in the hands of 1% there is no formula that works.
It's a bit of a slap in the face for people who have lost their homes but sadly there isn't much they can do!
If the government gets into the rental market, the rents will go down, as this will simply move a glut of properties from the selling side to the rental side. While the logic seems sound, the sheer numbers of homes that could be earmarked for rental will have a negative impact on rental rates, by increasing the supply of rental properties until the supply exceeds the demand, and drives rental rates down. This would be especially true in the section 8 sector, which could benefit from more supply, and use that to reduce their rental rates to existing landlords.
Cheap rents and markets finally stabilizing, sounds good to me!
it does sound good but what all do u have to do in order to rent to own a forcloser home