There’s an 800-pound gorilla in the nation’s hardest-hit housing markets: hundreds of thousands of foreclosed properties are selling, and there’s four times as many potential foreclosures behind them.
The Journal writes today that one idea gaining support in Washington is an effort to pull some of those properties off the market and rent them out, either on homes owned by federal agencies or loan giants Fannie Mae and Freddie Mac.
These firms and U.S. banks currently own more than 500,000 foreclosed homes, and there’s another 2 million loans in some stage of foreclosure. The high share of distressed sales in many struggling markets is contributing to continued declines in home prices.
“Can we find a way to try and reduce that overhang or to try to provide incentives for investors to covert them?” said Federal Reserve Chairman Ben Bernanke in testimony to Congress last week.
Critics worry about the risk of the government as landlord. One solution: sell federally backed foreclosures to investors who would have to agree to rent them out for a to-be-determined period of time. Investors would rehab the properties, fill them with tenants, and hire a national property management firm to oversee the day-to-day landlord needs.
Answer by May-20 at 8:27 AM on Jul. 24, 2011
My thoughts are that there are 4 foreclosure homes on our street that have set empty for well over a year. These are nice homes and could be bringing in some profit. However, my other thought is that once a house is "rent house" it's not as well cared for. We've looked at hundreds of home over the years and you can spot a rent house. To me it could bring down the purchase price on the homes so it would need to be weighed out - the amount of loss in selling price vs. the amount of income from renting the property. Also, if the government becomes a rental agency, who is going to fix these properties and perform upkeep? Are we going to end up with government handymen making six figure incomes? I can see that happening.
Answer by scout_mom at 3:09 PM on Jul. 23, 2011
Answer by meooma at 6:26 PM on Jul. 23, 2011
Answer by itsmesteph11 at 10:09 PM on Jul. 24, 2011
Answer by wheresthewayout at 12:23 AM on Jul. 25, 2011
i do not want rentals in my neighborhood. that will only lower the value more. i think they should stop building new homes. it is ridiculous that there are many new developments going up in my county and we have one of the highest rates of foreclosure in the nation. time to use common sense!
Answer by princessbeth79 at 6:28 PM on Jul. 23, 2011