Turning foreclosures into rentals

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The Federal government wants to reduce the number of empty and deteriorating foreclosed houses and, at the same time increase the number of rentals available, thereby lowering the currently excessive rents being asked in many areas.

One of the biggest problems in dealing with the large numberof foreclosed homes is that they exist in large clusters in the worst hit cities. This pushes values in many areas into a downward spiral. Empty unmaintained properties depress values in many neighborhoods. This causes values to drop further for those owners left, causing still more underwater properties. In turn this leads to more short sales and foreclosures and a serious problem for cities and Counties dealing with increased crime and vandalism.

Federal officials hope to launch a pilot program soon to convert government-owned foreclosures (FANNIE MAY and FREDDY MAC) owned properties into privaely owned rental homes.

The plan is to package large numbers of such properties into a single bulk purchase at prices which will draw large investors in. A condition of the deal would be that these properties would remain as rentals for a pre-determined time before they can be sold. If successful such a program could help in 4 ways:

1. Get these properties back into productive use.

2. Stabilize blighted neighborhoods.

3. Expand the supply of rental properties in such areas to accommodate the surge of new tenants resulting from the loss of their homes.

4. Reduce the number of empty, deteriorating homes owned by the government.

 If support is forthcoming from our politicians this could be useful step forward to a final resolution of the worst foreclosure crisis since the early 1990’s. I refer to the S&L Scandal which ran from 1989 through 1992 and cost every single person in the country approx $50,000.

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