Treasury: Selling foreclosed homes to investors to rent out

  • Posted by a hidden member.
    Log in to view his profile

    Aug 11, 2011 12:32 AM GMT
    You've heard it before--rents are going up while house prices are going down. (I've rented all my life and saw my rents going from $900 10 years ago to $1100 now). What better solution than to convert the thousands of foreclosed homes into some renting arrangement that produces revenue?

    (Of course, this assumes that the rent is less than the mortgage, which is true for a lot of housing markets)

    http://www.washingtonpost.com/national/white-house-said-to-set-goal-easing-housing-price-pressure/2011/08/10/gIQAir4d6I_story.htmlAug. 10 (Bloomberg) -- The Obama administration is seeking ideas from investors on how to convert thousands of foreclosed properties owned by government-backed entities into rental homes, administration officials said.
    ...
    Encouraging investors to buy foreclosed homes in bulk would help shrink the U.S. housing surplus, stabilize property prices and provide affordable rentals, Morgan Stanley housing analysts said in a report Aug. 8.

    The collapse of the U.S. residential real estate market triggered the recession in 2007 and has stifled an economic recovery, according to the Morgan Stanley study. Incentives such as tax breaks and eased lending terms are needed to encourage more investors to purchase repossessed homes, repair them, and rent the properties at affordable rates to people who can’t afford to buy a house, analysts led by Oliver Chang wrote.

    “What’s important to do is help clear the backlog as quickly as possible with as little detriment to home prices as possible,” Chang, head of housing strategy in Morgan Stanley’s research division, said in a telephone interview Aug. 8. “The goal here isn’t to help investors. The goal is to provide quality affordable housing.”
  • creature

    Posts: 5197

    Aug 11, 2011 1:30 AM GMT
    Interesting. I wonder if this will come into fruition.
  • Posted by a hidden member.
    Log in to view his profile

    Aug 11, 2011 1:42 AM GMT
    We're sorta doing the same thing in our condo complex. My partner, in consultation with our condo attorney, has learned how to seize properties here on which mortgage and/or association maintenance fees are in arrears.

    The mortgage holder or condo association seizes the property, which is then rented. The rent covers the monthly maintenance fee, which allows all other owners to avoid an additional hike in their own fees to cover the delinquency. And most mortgage holders do not take a share of the rent, hoping to sell the property, so that becomes income to the condo association.

    Of course the renter is made to realize that their unit may be sold at a month's notice, requiring them to leave. But they're getting it at a discount rate, and we do not lack for takers. Win-win all around, except for the original owner who defaulted.
  • Posted by a hidden member.
    Log in to view his profile

    Aug 11, 2011 1:57 AM GMT
    Art Deco that sounds like a good business plan. Do you have renters that are the original owners who defaulted?