Different people have different opinions about what to do with the glut of foreclosures: perhaps convert them into multi-family units, bulldoze them, or donate them. It appears the federal government might try another route: renting them.
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…
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.
This sounds like it could turn into a large program with a lot of moving pieces. Would these homes essentially be converted into temporary public housing?
If done well, this could help deal with a rental problem. Even before the economic crisis, a number of metropolitan areas suffered from issues of affordable housing: there simply were not enough cheaper and good units available. Additionally, there was often a mismatch between where these homes were located and where jobs were located. Could renting these foreclosures be a viable solution?
How many communities would be interested in supporting a program like this? I could imagine some interesting battles within better-off suburbs. On one hand, as the article mentions, foreclosures tend to drag down home values. On the other hand, having the federal government actively involved as a landlord in more neighborhoods would make a lot of people nervous.