August 15, 2011

Press highlights call for ideas to strengthen rental market using foreclosures

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In case you missed it, last week HUD joined  the Federal Housing Finance Agency (FHFA) and Treasury to announce that the three agencies will explore using government-owned foreclosed properties to bolster the nation’s rental market. The three agencies on Wednesday released official Request for Information, which solicits outside ideas on how to turn the government’s trove of foreclosed homes into a positive force to strengthen the rental market. ProPublica examines the announcement – including arguments both for and against seeking to transform foreclosures into rentals.

And after the jump, we’ve pulled together a quick rundown of other major press coverage:

New York Times (Wyatt, 8/11) U.S. Seeks Ideas on Renting Out Foreclosed Property. Uncle Sam wants you — to rent a house from Uncle Sam. The Obama administration said on Wednesday that it was soliciting ideas on how to turn the federal government’s inventory of foreclosed houses into rental properties that could be managed by private enterprises or sold in bulk. The goal, the administration said, is to stabilize neighborhoods where large supplies of empty, foreclosed properties have hurt property values. In addition, the plan is an effort to clear the nation’s balance sheet of real estate holdings that, because they have been difficult to sell individually, have hung over the housing market and stunted sales of existing homes and new construction.

USA Today (Jackson, 8/11) Obama team seeks ideas on foreclosed properties. The Obama administration is asking investors for ideas about what to do with foreclosed housing properties, including the possibility of turning government-backed projects into rental homes. The plan is to “explore alternatives for maximizing value to taxpayers and increasing private investment in the housing market, including approaches that support rental and affordable housing needs,” said an administration statement.

Washington Post (Dennis, 8/11) Government-owned homes may get ‘for rent’ signs. The Obama administration Wednesday went searching for creative answers to a perplexing question: How can the government rid itself of the glut of foreclosed properties it now owns in a way that nudges the housing market toward recovery? As the housing crisis has persisted, government-backed mortgage giants Fannie Mae and Freddie Mac, along with the Federal Housing Administration, have taken possession of hundreds of thousands of foreclosures throughout the country. But selling those homes at decent prices in an abysmal market has proven difficult.

6 Responses to Press highlights call for ideas to strengthen rental market using foreclosures

  1. I’m a home owner and last thing I want to see is for all these foreclosures to hit the market and lower our home values even more. However, this is actually the best thing to do to let then hit the market and let the market reach equilibrium. The government needs to stop playing with the market. While there may be some good intentions here, there is also the bad intention of not letting the real estate market properly bottom until after elections. We need politicians of strength, who will do what is necessary, not prop up problems that ultimately make it worse in the long run.

  2. I am a HUD housing counselor and a once real estate investor. I think that it’ll be a great idea to allow the HUD foreclosed homes to be rented in stead of being sold. Renting those homes rather than releasing those properties for sale means that less homes will hit the for sale market, which will in turn help sustain the values. Renters can make monthly payments which can be given to HUD in order for HUD to provide grants to housing counseling agencies for foreclosure prevention counseling. That will help everyone all the way around. Renters can find affordable rentals, housing counseling agencies can provide home buying counseling and education to those renters, more funding can be derived from rent payments, housing counseling agencies can provide more services to homeowners to prevent more foreclosures, and the federal government is happy. This can be a real solution with the right people in place.

    Instead of getting advice from some people higher up that can’t fully grasp the current state of the communities, HUD should contact more key housing counseling agencies to find some workable solutions. I’m willing to talk.

  3. I think that would be a great idea my wife and i found a hud home we love have gone through home headquarters first time buyer program but still need a little help with credit i would love to rent the home at 2025 apulia rd lafayette ny 13084 and then purchase the same home i do not understand why the federal government doesn’t cash in on this idea it would relieve the empty housing that it owns and would stop further decay of these properties .

  4. Give them to the veterans, when they come home, in lieu of other benefits (if they agree to it), or to those getting monthly Social Security, in lieu of the dole (for those who agree to it). Give them in lieu of funds, whenever possible. This saves the neighborhoods, carrying costs, outlays for various entitlements and provides housing and security.

  5. I am glad that the fed is realizing they need outside help to figure out this problem. I believe there is a quicker, better solution to this debacle.

    I am a real estate agent/investor from Fort Dodge, IA. I have sold many HUD foreclosures to perspective clients and am about to close on one for my investment portfolio. My idea has to do with stabilizing the housing values right now rather than waiting till later. The idea starts with the house being foreclosed. A realtor is assigned to the property to value it as a foreclosure and to value it in a renovated state. The house is then assigned to a contractor and they put together a bid to renovate including both cost of materials and labor. There will then be a list of qualified investors signed up for this program. The house will then be auctioned off to the highest bidder. The title is then passed to the investor on a land contract rather than a normal arms length contract after a predetermined down payment. The reason for the contract sale is that in all normal arms length transactions contract sales are not included in the appraisals of those properties. This will help keep the glut of foreclosure sales from lowering property appraisals in the neighborhoods. These properties are then renovated by the private investor to the standards set forth by the market experts. After that is completed the property is remarketed through HUD’s website and on the local MLS. I would also like to see the owner occupant purchasers to be provided the same programs on these homes as they are on purchasing the foreclosed properties.
    Another thought to make this more enticing to investors would include a break from short term capital gains taxes and maybe some escrowed funds for certain repairs to theses properties.

    In closing, I believe that have included all my thoughts on this process and I do believe this to be the best way to stabilize values now instead of later.

  6. I believe it is a great idea as well. The root of the real estate price decline problem is the number of foreclosures. If the foreclosures are off the market, whether they are rented or purchased, values stabilize. Anything that keeps a property occupied is a great idea. You can see a number of foreclosures and REO in the Chicagoland area at my website PrimeRealEstate.com. Nice read!

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