Gov't considers turning foreclosures into rentals

AP ^ | Aug 10, 1:18 PM EDT | By DEREK KRAVITZ

[Red Badger]

The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.

The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent roughly 250,000 homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration. All of the homes are foreclosures.

The U.S. government rescued the two mortgage giants in September 2008 and has funded them since the financial crisis. Fannie and Freddie own or guarantee about half of the nation's mortgages and nearly all new mortgages.

Converting the homes into rentals may reduce "credit losses and help stabilize neighborhoods and home values," said Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees Fannie and Freddie.

Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices of surrounding homes.

It also might meet the growing demand for rentals. Since the housing meltdown, nearly 3 million households have become renters. At least 3 million more are expected by 2015, according to census data analyzed by Harvard's Joint Center for Housing Studies and The Associated Press.

A federal "request for information" released Wednesday included an option for previous homeowners to rent out the homes or for current renters to lease to own. Private investors could also be allowed to oversee the conversions. Officials are also mulling whether to implement a program in metro areas hit hardest by foreclosures and in those with high demand for rental housing.

The homes include single-family homes and condominiums. The deadline for responses is Sept. 15.

[EBH]

Your naivete is showing.

Bleeding heart liberals will see this as an opportunity to house the homeless, section 8, those who can least afford it...

Just a few months ago FReepers were kidding that this would happen....

[EBH]

Oh and let’s not forget the rundown condition the previous owners left these homes in. That will require government funds to bring them up to code.

Oh and ....will that make for the absentee landlord? Or worse some more government workers managing the property with nearly impossible regulations for evictions?

[rintense]

Renting homes does NOT raise property values. It will only lower those of the home owners in surrounding areas.

I told ya this was going to happen 3 years ago!!! It's social engineering at its finest.

[liberalh8ter]

Exactly. It's been a long, painful transition but the plan is almost complete. You have to give these democrats credit though, if they would put as much thought, planning and preparation into solving the debt crisis as they do into figuring out backdoor reparations, America would be in great fiscal shape.

[GOPJ]

They could take homes in conservative leaning districts, fill all with Dem voters and try to flip the districts to their side.

Dems always make legislation that helps their pet victim group voters. They don't care about Americans - they care about dems. They don't even care if they are Americans - illegals will do fine - better than an American who happens to be conservative.

The vast majority of these homes will go to dems... I don't know if they can 'flip' districts, but they can sure make living miserable for people who have no desire to live next to a liberal...

[riri]

Best post ever!

[mojito]

The problem is that once a bureaucracy is created to administer these rental properties, there will be no incentive to sell them, along with a huge number of newly created dependents who want the govt. to continue to be their landlord, at very attractive rents.

And the result?

A new group of people who will reliably vote Democrat, because it will be “evil Republicans” who will insist that Fannie and Freddie sell the properties. And a huge new socialized sector of the economy in what had once been a “free market.”

ACORN would be pleased.