Thursday, January 19, 2012

Would a Foreclosures-to-Rentals Program Benefit Only the 1%?

On December 27, 2011, John Gittelsohn, of Bloomberg News, reported that the Federal Housing Finance Agency (the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the nation’s twelve Federal Home Loan Banks) had issued an RFP for ideas related to turning a portion of their expansive inventory of repossessed homes into rental units. The government’s strategy seeks to “reduce losses, stabilize neighborhoods and support housing values.” *

Among the four hundred-plus “valid” proposals received were submissions from the same financial and investment companies that played a part in the housing bubble and collapse, including Deutsche Bank AG, Fortress Investment Group LLC, Carrington Holding Co., Barclays Capital Inc., and UBS AG. With more than 6 million homes expected to be repossessed by banks by 2016, with Fannie Mae and Freddie Mac servicing more than half of all US home mortgages and with the demand for rentals far outstripping the demand for home ownership, a foreclosure-to-rental program could have a substantively positive effect on the stabilization of real estate values.

Or, conversely, is it another opportunity for the same investors who sold the American Dream of home ownership down the river to gamble yet again with the national housing market and the U.S. economy? Will turning foreclosures into rentals in bulk benefit Wall Street more than Main Street?

*“Firms Give U.S. Plans to Rent Seized Homes,” by John Gittelsohn, December 27, 2011 12:01 AM ETTue Dec 27 05:01:00 GMT 2011

– Susan H. Tifft, NHS of Baltimore Resource Development Committee

Link to the article here
Posted by Neighborhood Housing Services of Baltimore Inc. at 1/19/2012 10:09:00 AM

4 comments:

  1. Really nice tips and good informative blog to talk about. Thanks!foreclosuresus.com

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  2. A program like this would just reflect reality. The 99pc would surely benefit. The rental market is very tight and having more units hit the market would benefit people who do not own homes, especially because theirs' have been foreclosed on. As a UK citizen, I wish they'd implement something like that back home.

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  3. Surely the part of the 99% that does not own homes – whether because they were priced out of
    the market during the "bubble" or lost them to foreclosure during the "bust" – will benefit from a
    larger supply of rental housing. Supply will drive the cost of renting down, we hope. My
    question is this: What happens to a neighborhood built on the premise of homeownership that
    then transitions to a neighborhood of rental housing? NHS of Baltimore has traditionally
    operated on the principle that homeownership revitalizes and strengthens communities. Can
    rental units have the same effect?

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