By Nick Timiraos
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.
Supporters say while the government isn’t set up to be a landlord, neither is it any better prepared to sell thousands of foreclosed properties — something it’s already doing anyway. “Putting these homes in the hands of people who can take care of them and rent them out” would save taxpayer money, says John Burns, who runs a home-building consulting firm in Irvine, Calif. [CONTINUE READING]
By DEADLY CLEAR
The government allowed Fannie, Freddie and the banksters to run amok with unregulated derivatives causing many, if not most mortgages written between 2003-2008 to be
questionable, if not outright fraudulent. The banksters collapsed the economy and, yeah – there’s a lot of families that lost their homes, their equity, retirement, their kids’ tuition because THE BANKSTERS WROTE MORE LOANS THAN THEY COULD HOLD. Now, the banks are forced to foreclose. Not because homeowners don’t want to pay – but because regulators would shut down the banks if they had an accurate count of the bad paper the banks wrote.
Ben Bernanke acts like there are no fraudulent issues surrounding these unclaimed properties. No offense Ben – but you’ve been sleeping with the banks for far too long. Forgery is a crime. Fraud is surrounding your Wall Street pals like spit on a door knob. You want incentives to give “investors” something to bring them back – how about you and your pals get out of the game… and the investors might come back to the playing field. My guess is the individual states would have better luck at courting investors than Wall Street will anytime soon.
Mr. Burns – you are right – people that are in the home will take better care of it – but they shouldn’t lose it in the first place. Homeowners – all of them, whether in foreclosure or not, had no control over the inflated appraisals that the banks commissioned, or over the over-rated bonds that the banks manipulated or the relaxed underwriting guidelines used to suck in minorities and middle class that did not understand this was a “sting.”
Homeowners shouldn’t have to rent. In most cases, if the inflation in their homes was stripped out and their mortgage loans, reconstructed on “good” paper at 2% for 30 years – these people would be paying a revenue stream that would add up to billions – if not trillions of $$$ and pay back the debt.
The banks have been paid as have investors with TARP, insurance, federal funding – we [the people] need an accurate accounting! Most of the investors are suing the banksters for fraud anyway – and they should… it was the same fraud that affected the homeowners – only homeowners got zero disclosure.
If the federal government is too lame to see that it has revenue that can be generated – then turn the properties over to the states. The governors that I know are astute enough to figure out how to make the income work for them and hopefully replenish the pension and retirement coffers that Wall Street stole and gambled away.
Think about it. Here’s a conservative example: 67 MERS mortgages X $900 month payments X 12 months (1 yr.) = $723,600,000,000 new annual revenue.
That’s over $14 BILLION a year per state… Can you use that Gov?
If the federal government is going to pass that up (and again, its conservative) then it ought to get out of business and let the states take over – ’cause I’m positive they are smarter than that!