Two house Democrats have introduced a bill that will essentially create a “right to rent” for homeowners facing foreclosure if it is passed. The bill allows families facing foreclosure to petition a judge to stay in their homes as renters under a 5-year lease. An independent appraiser would be appointed to set a fair market rental value for the home, and this value could rise with inflation over time.
The creators of the bill (Raul M. Grijalva, D-Arizona and Marcy Kaptur, D-Ohio) believe that the bill will help remedy the “profound, historic crisis we face” that they believe HAMP cannot handle alone. They cite statistics showing that the number of people who have received HAMP assistance but then fall delinquent again has nearly doubled between February and March 2010, and believe that the benefits of their bill could help stem the foreclosure tide while providing banks with “reliable rental income.” Additionally, representative Grijalva pointed out, keeping families in their homes as renters – homes that, theoretically, they will continue to regard and treat as their own – will help prevent decay in neighborhoods, increases in crime and mass vacancies without adding burden to the taxpayers.
“Right to rent” initiatives would be confined to homes purchased at or below median price for their metropolitan statistical areas, and they must have been the homeowner’s primary residence for no less than 2 years. Mortgages originated before July 1, 2007 would be eligible, but not more recent loans.
This is certainly a creative approach to a serious problem, and it is not without potential. However, it seems that a fair number of logistical concerns have been overlooked, since along with this “right to rent” comes many other renters’ rights concerning how the properties must be maintained, what the new landlords’ responsibilities are to their new tenants, and the legal issues with collections and evictions. I will certainly follow the development of this program with interest as it moves through Congress.
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I think it’s a good idea.
Because this arose in a foreclosure situation in case of non-payment of rent the bank should have the same right to evict as it has in a foreclosure and shoujld not have to go through the landlord tenant process.
Immediately what comes to mind is that a bill like this would FORCE banks to hold the properties for that 5 year period, which would put them out of business! Banks MUST get the non-performing assets OFF their books in order to continue to do business, and one way that they do that is by SELLING the homes, not retaining them!
While not unsympathetic to the people being foreclosed on, logic indicates they are losing the home because they cannot afford THAT home – it doesn’t mean that they cannot rent elsewhere – somewhere more affordable. Life happens to all of us and we must adjust. If that means living within ones’ current means, then they must move into something they can afford.
Investors are making great strides in stabilizing the market, purchasing REO properties, and getting homes into the hands of those that can actually afford them.
By passing a bill such as this, investors would no longer be purchasing REO properties, as they would not choose to be tied into supporting a non-performing asset by keeping “tenants” in place (for five years??? Are you Crazy?) that most probably cannot pay the rent. Number one rule of purchasing homes is make the numbers work, then get the former owners OUT of that home, and NEVER rent them the home they formerly owned. Many investors will move the former homeowners into OTHER properties they own, yet it is foolish and very problematic to leave someone in a home they just lost to foreclosure.
As to taking care of the property – the vast percentage of homeowners losing their property no longer take care of the property AT ALL, even when they are living in it, and many even damage the property, and strip items out of the property.
How much to these legislators actually KNOW about our industry? I’m thinking they need to walk a week in our shoes, going into these homes, seeing how run down they are, and realizing the REALITY of being an investor. Forcing someone to retain a “tenant” that can’t pay is just asking for MORE problems, not solving anything! The former homeowners need to move into something they CAN afford!!
My first reaction to this article was:
Are you kidding??? More insanity!
When one stops to consider all sides to this and the rippling repercussions thereof, you will realize that this bill must be stopped!
There is a thin line fixing to take place here if they go thru with this
How ever there is also a very easy way to fix this problem we are having here ( But everyone looking at it is not looking the right way and the funny thing is it’s so simple a 10 year old could fix it ).
Now I have been investing for 18 years and i know there are over 15 thousand other Investors out there that know just what I’m talking about because I have met with them over the years. The first problem started with they bailed out wall street not main street because main street is what make the world run. 2nd is the banks the problem the need to fix is right in front of there face and there doing it but the wrong way and of course us Investors don’t mind it because of the cash flow we make.
R U KIDDING ME? What NEEDS to be done is the Damn PRETENDER LENDERS need to go to JAIL for FRAUD. I WAS a Homeowner in Foreclosure UNTIL I had an Attorney point out that almost ALL of my Mortgage Note is FILLED with FRAUD, starting with the very FIRST LINE that says: “For a LOAN that I have received,”
FOLKS, YOU DID NOT RECEIVE A LOAN, THE BANKS “SOLD” YOUR NOTE 2 WEEKS BEFORE YOU EVEN SIGNED THE DAMN THING…. AND THEN THEY CONTINUED TO SELL YOUR SIGNATURE AND YOUR SOCIAL SECURITY# WHICH IS A FELONY!
This Administration is FILLED with Ex GOLDMAN SACHS Execs, and that is comparable to the Fox guarding the Henhouse!
PLEASE EDUCATE YOURSELVES! STOP BLAMING THE HOMEOWNERS! I help COPS and NURSES, and PASTORS, and DENTISTS… anyone that owns a house… ASK YOURSELF HOW ALL THESE PEOPLE GOT INTO THIS PROBLEM, AND “NO” IT’S “NOT” BECAUSE THE HOMEOWNER WAS GREEDY, IT IS BECAUSE THE LENDERS WERE!
And renting back to the Homeowner! Thats comparable to a THIEF renting your STOLEN MERCHANDISE back to YOU!
GIVE ME A FRIGGIN BREAK!
And of course, this will be an opportunity for the Feds to create a whole new arm of government that will act as landlords. Creating a whole new department of enforcement for “renters” so the asset can be maintained in some sort of preservation state.
Will the enforcers be working for the banks or the Feds? Who will have authority? Is this really a federal problem, state, or community responsibility?
And I agree. Five years?????
Get Real you have it right on the money, (or lack thereof). This seems to scream – MORE GOVERNMENT! Let investors like us take the risks and rewards. It is our job.
Just a quick response to “Get Real”. You’re missing something. In nearly all cases, the market rent will be quite a bit lower than the PITI that got them in trouble was. And secondly, once their is cash flow on the property, it’s really not a non–performing asset. I’m no accountant but I believe the bank will need to write down the amount that was lost… the current principle balance vs. the new market value but hey. that’s why they are so slow to agree to short sales. I can’t say whether I am for or against the bill but anything that will force the bank’s hands into making decisions on their properties faster can only help the situation.