Skip to comments.U.S. Weighs Renting Out Foreclosed Homes
Posted on 08/09/2011 6:56:32 PM PDT by maggief
The Obama administration will announce plans Wednesday to seek investors' ideas for turning thousands of foreclosed properties owned by government-backed entities into rental homes, according to administration officials.
The move is intended to put a floor under declining home prices by creating a way to deal with hundreds of thousands of potential foreclosures in coming years.
Mortgage giants Fannie Mae and Freddie Mac sold a record 100,000 homes during the second quarter. Together with the Federal Housing Administration, the entities owned about 250,000 homes at the end of June, or around half of all unsold, repossessed properties. Another 830,000 homes backed by the entities are in some stage of foreclosure, according to Barclays Capital.
The Federal Housing Finance Agency, which regulates Fannie and Freddie, will issue the formal "request for information" with the administration to solicit proposals that shrink the glut of foreclosed properties weighing on the residential market.
One proposal would sell packages of hundreds or thousands of foreclosed properties in bulk to investors that agree to rent them out. That approach is preferred by the Department of Housing and Urban Development, which is taking back properties as defaults mount on loans backed by the FHA.
Another approach would allowlet investors enter joint ventures with Fannie or Freddie to invest in a pool of converted rental homes. A national property-management business would handle the day-to-day landlord responsibilities. Investors would pay for rehabbing and maintaining properties and would share revenue from monthly rental income and the ultimate sale of the property. Such a joint venture would be modeled on the Resolution Trust Corp., which sold failed banks' assets in the early 1990s.
(Excerpt) Read more at online.wsj.com ...
How convenient that it worked out this way.
Great...more Bammy stash. Is that where the maintenance and upkeep for these give-away houses will come from, too?
...”joint venture with Fannie Mae and Freddie Mac” and that’s where any plan falls apart like a cheap suit.
So which set of 0bama’s coneys will get first crack at these houses at rock bottom prices.
The gubmint owns houses? Doesn't sound constitutional to me.
Great. The new single family Project, right next door.
This is chilling.
Obama is a Pharoah who knew not Joseph.
And if you vote for me I promise you a home in every garage!
It is at least more honest than telling us we own our homes and then charging property tax ie rent to keep them.
I see two problems here. First, somehow you’d have to write this off via the banking sector as a total loss in some cases...you won’t get prime rental dollars to make up for the money owed on the house. The second problem is who would manage something like this? Neither Fannie Mae or Freddie Mac are designed to handle something like this. You need an organization that handles the money and fixes homes when necessary. I would predict that third entity has to be created out of thin air...to run something like this.
Does the banks have clear titles to all these properties. No investor will buy it unless this is cleared up. Guess fed will come up with a law to loosen this requirement or a shortcut (issue new fed titles that replace old title) thus immunize the banks screwup and investors risk of buying the houses. In other words, gov will interfere with the conventional property laws and screw everything up for the regular home owners.
‘seek investors’ ideas’-
And that’s supposed to mean something more than the faux headlines.???
“A national property-management business would handle the day-to-day landlord responsibilities. Investors would pay for rehabbing and maintaining properties and would share revenue from monthly rental income and the ultimate sale of the property.”
The potential for “unintended consequences” is mindboggling.
Just imagine how much the value of the properties could rise after they’ve been rented out to people that the government would favor. /S
Forget this considering the kind of people they would rent to. Just blow up your neighborhood and be done with it.
Various “projects” come to mind. You know the FDR federally finance high-rise apartment buildings that have become synonymous with slum projects. Cabrini-Green is a prime example.
...because centralized planning and meddling has been so helpful in every other area they’ve tried it.
What’s amazing is that living under FDR had to be much worse than this. Can you imagine? 4 massive landslides? Oy.
You have to give Baraq credit.
He may have been a screw-off student in college, but when
he got his Masters in “Operations” from the Chicago political mob, he learned well.
I agree with you 100%.
Would you vote against your landlord?
Ghetto Redistribution—sending the inner city to your neighborhood.
Death of The Suburbs
Right, what better way to get the meth cookers out into suburbia where they can cause the maximum damage to what’s left of society?
You need an organization that handles the money and fixes homes when necessary. I would predict that third entity has to be created out of thin air...to run something like this.
And like everything else, it will never go away.
Lets say that you are an investor in single family rental property, and the government just announces that they are going to raise your taxes so that they can move in and compete with you using your profits to underwrite the usual bureaucracy that will [mis]manage the growing rental real-estate portfolio that the government will amass.
It is no different if the mob moved into your neighborhood and demanded that a percentage of your rents are diverted to them running rental properties across the street offering lower subsidized rents to undesirables who will drive down market values.
Years ago, I came up with the theory that the best house to buy was in a neighborhood where the bathrooms equaled the number of bedrooms. Generally speaking, to afford that home required two incomes, or one real good professional income. In the event one or more adults in that household developed bad habits like drugs, adultery or gambling, the family couldn't afford to stay there and would be compelled by market forces to move. It was a self-cleansing ecosystem.
With the government getting into the rental property business, they will bring in the dregs of society and instead of evicting the miscreants that tear the property up and make the neighborhood a regular stop for police and SWAT teams, you get to watch your investment portfolio plummet - not much unlike we are watching stocks and bonds fall.
Yeah. I don’t see how this could go wrong. [/sarc]
Some bureaucracy that does not yet exist. Forming this agency will create jobs, don't you see?
Then there is the issue of renters that trash the place, etc. The government lacks the interest to maintain the value of the property.
This SAYS that investors would buy the properties and be responsible for upkeep and a “nationwide” entity would act as landlord. First of all, you’re right. That will be a new government agency.
Second, who will the investors be? I’d bet my last dollar it’ll be the same people who foreclosed on the properties. Chase, Wells Fargo, BOA....and the prices will be dirt cheap.
These properties were already paid for by TARP. Now the banks will get them back for pennies on the dollar then rent them out.
If this is such a good idea why not let the people living in them now deed them back then start paying rent. I’ve got a house they can have if they want it. And I’ll rent it back from them for half of what my payment is.
Crack houses, meth houses, prostitution. All paid for by our taxes. Great.
It means who agrees with what we ARE going to do and will support our social programs and make some stash on the way.
How about just putting the damn things up for auction like they are supposed to?
Soon HOA's all over America will start burning down fore-closed properties to save their own property values.
Next step will be that the Goobermint decides who lives where (and they take the great homes due to their importance to society).
Barry’s plan is coming together. Socialism/Communism here we come!
Section 8 on super steroids.
And when they don't pay the rent, sell the appliances, the copper wire and whatever else they can get their hands on they will go looking for the next handout.
Well shovel ready jobs didn’t work out so well but slum ready housing will certainly be in your neighborhood real soon.
Well, we all know what has happened with government housing in the past, don’t we?
Otherwise sell them on the open market to whoever has the cash!
Nearly free rent for those receiving Obama’s free money.
Will these rentals be restricted to Blacks, Mexicans and Union members?
See people, Obama really does care about America.... just not your America.
Short selling the properties to themselves isn't going to make money. They don't need to; they already own the properties outright. Short selling a fraction at a time is just cut their losses without collapsing the market, and the banks are dragging their feet like you wouldn't believe to stretch the process out. California is full of 1/2 million dollar homes that the owners aren't paying on, because the owners know the banks won't foreclose. The banks don't want the land, they want payments.
The idea that the banks want these properties for 'pennies on the dollar' sounds good, but in reality, it's like getting a free foot by sawing your own foot off.
I deal with this every day, and believe me, the banks do not want these properties coming off the market en mass and at a fraction of the cost. The shadow inventory of real estate in California alone is enough to atomize the market of the entire state if it were all to be pushed back into circulation at a lower price. It would drag everything down with it, as well as have secondary effects like putting financially irresponsible people into 'cheap housing' in nicer neighborhoods, who don't really care to mow their lawns, turn down the music, or put their Rottweilers on leashes. You think Uncle Sugar is going to evict any of these fine constituents?
This plan is a Section 8 doomsday scenario. Especially if it's written by the same people that wrote Dodd-Frank. The only ones who would benefit would be voters that support this and actually move into a 30 Year Obama Home, the new bureaucrats that wind up running this monster agency, and whatever investors play ball for government bennies. If any. The 'investors' are probably going to be taxpayers, forced to fund this wealth redistribution behemoth.
Is there no end to this madness.....???
THis article proves that having gotten possession of private property by making it NON-PROPERTY thru the legislatively allowed banking and mortgage servicing practices, the US govt intends to redistribute it, in this case by renting, properties that have no titles, no notes, no actual county registrations of transfer as a result of bank mortgage servicers fraudulently destroying (think MERS,etc), deleting, losing, not filing legal documentation regarding sales and transfers. Taxpayers are liable for the losses already. Govt has committed a massive crime by making real private property non-property for its use. It is worse than destroying a $100 bill by burning it, a Federal Crime...and this property Federal Crime is the trillions of dollars of potential risk with Fannie and Freddie, with several trillion dollars of sub-prime securitized mortgages with no...papers.
There are millions of other mortgages not being foreclosed on by our largest banks as they have no capital reserves to bring them back on the books from level 3, and the US courts are not in support of property foreclosures with absent legitimate papers. Bank of America is in big trouble over this currently especially, but not exclusively with Countrywides mortgage assumptions. Will these properties be laundered somehow by the banks with Fed Reserve and Executive branch help, by somehow renting them or selling/transferring them in lieu of foreclosures...such as repackaging them for sale to pension funds?? LAUNDERING what is essentially...non-property?
The US govt. is distributing property by renting that cannot qualify for foreclosure because it is.....non-property. If it was not for the de-legitimization of property, the property could be marked to market at prices that would NOT sustain housing prices at current levels. So, it has to be redistributed, somehow, by Fannie and Freddie in the above case by the US government.
All such mortgages by the millions seem to be permanently out of the private arena and probably all will end up in the federal arena. The Fed govt is in the housing redistribution and financing and rental business not owned by anyone, but controlled by the US government...JS
The property situation seems like the situation of Taiwan, an unincorporated territory of the US obtained by the 1951 Treaty of San Francisco, not legitimate for sovereignty, with no “papers”, but subject to the US Congress for permission to operate a government. Property is in limbo for lack of papers, and is in the hands of the US govt. to do with what it pleases.
Again, I believe TARP went to these banks. Remember, they were called “toxic assets”. That means they’ve already been paid.
It’s Obama’s plan to get hip-hop into the ‘burbs.
The bank 'paid' for the house when it covered the loan. It's their house. Now the bank is sitting on 5 years worth of inventory of 500k homes it can only sell for 250k. They don't want a five year supply of 250k houses. They don't want to get rid of them on mass, because that would hurt their other investments. They want the 2 million dollars in interest they'd get on a 30 year mortgage per 500k house. Not a million dollars in interest they'd get selling it at 250k. (I'm oversimplyfying, but you get the idea.)
It's the payments and the interest that the banks want. Buying land cheap doesn't do them any good if they have to sell it cheaper and foreclose on it in a year.
This ObamaHome deal would introduce 'stability' into the market by forcing homes to be 'sold' to some government agency or 'investor group', and then controlled like Army post housing. I imagine they'll make the tenants 'pay' by deducting the money out of their welfare checks (after adding in a housing allowance) and deliver that money to the government property managers to convince America that ObamaHome is turning a profit.