So…of all the possible things that could usher stability into what is clearly a massively damaged housing market, could new legislation do the trick? OK, I can practically see the cynical looks on many of your faces. But yes indeed, a new bill is being introduced which has the potential to bring much needed relief to the dilapidated housing sector…at least in the view of the Consolidated Credit Counseling Services (CCCS).
A new bill which is intended to aid in balancing a shaky housing market is being reviewed by the House Financial Services Committee (HFSC). The hope is that this new legislation will result in the lessening of the strain that unsold foreclosed homes are placing on numerous neighborhoods across the United States. The bill has been named The Neighborhood Preservation Act of 2011 (H.R. 2636). They always do make these things sound so majestic, don’t they? The legislation would empower FDIC-member lenders along with Fannie Mae and Freddie Mac to engage in 5-year lease contracts to lease REO properties back to the foreclosed homeowner, or to an entirely different party altogether.
According to Howard Dvorkin, the founder of CCCS, these kinds of leasing arrangements could be a very good thing for neighborhoods that are littered with empty, foreclosed homes. Dvorkin states that it would add a degree of stability to these areas given the fact that the homes would be maintained until such time that the housing market recovers to some significant degree. The intent is that by the time the houses are ready to be sold, they would hopefully have appreciated in value, making it possible for the lenders to limit the financial knock which they receive. The general premise is that it is better to have rented properties that are taken care of, as opposed to vacant foreclosed homes that are allowed to deteriorate and become derelict.
It all sounds somewhat rosy on the surface. Sure, it’s not good for neighborhoods to have loads of empty foreclosed homes in them attracting all sorts of squatter and criminal elements. Sure, the values of these homes as well as other homes in the area would be safeguarded to a greater extent than if these foreclosed homes were simply allowed to become rundown. And of course, it’s so nice to allow homeowners to rent the home which they actually had every intention of owning and never losing in the first place. Can you sense just a bit of a sarcastic tone?
Wouldn’t it instead be infinitely better to provide struggling homeowners with a genuine fighting chance at saving their home via a loan modification that makes it easier for them to cope with their mortgage obligations? Wouldn’t it be far more honorable to give stressed and downtrodden families all the tools they need in order to position themselves more confidently and effectively in their quest to weather their financial storms with their precious home still in their name? It seems to me that this should be the primary focus. Every individual or family that is honestly struggling and doing their best to save their home should be given every opportunity to do just that, and for millions of Americans loan modification represents the best way to accomplish this.
The single driving purpose of MyCaal software is to give homeowners the greatest chance possible of securing the loan modification they need, and making the application process as clear and comfortable as it can be.
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About Carla Ghosn
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CEO and Founder of Caal (mycaal.com) keen on helping American homeowners save their home. If you need help with your loan modification, visit www.mycaal.com to get help on pre-qualifying your loan for approval, as well as preparing and printing your loan modification package online. |
The problem with this idea is it makes Lenders and Fannie and Freddie the largest landlords in the nation. Remember your history folks. When the Land Barons of Europe controlled all the land in the province the poor stayed poor and had no chance to better themselves. These large institutions will rent these properties for whatever they can get, they will not keep them up or improve them, and we will turn good neighborhoods into slums of run down rentals.
Meanwhile all the individual mom and pop investors who have bought a rental property or two will be pushed into lowering their rental rates to compete with the big banks and not able to make their payments on their rental property any longer. Remember these banks and institutions don’t have to make a mortgage payment on these properties so it doesn’t matter how much they rent them for.
We need legislation that makes the banks take responsibility for improving the housing market, not another bail out where they can just become real estate companies and make more profit without any investment or risk.
Mash I do not agree that Fannie and Freddie should engage in 5-year lease of REO properties. They should have mitigated the number of foreclosures by keeping as many people in their homes not just through loan modification, but by providing loan modification with principal balance reduction so that (1) people could afford their payments, and (2) people who choose to walk away from bad investment (if and when their homes are so underwater) would stick to them if the principal balances were reduced.
I agree with your comment “We need legislation that makes the banks take responsibility for improving the housing market, not another bail out where they can just become real estate companies and make more profit without any investment or risk.”. This one though is not a bailout, is a way to prevent homes from being vacant. What they should do is sell these homes to investors and let investors sell these home, instead of allowing Fannie & Freddie to keep the REO home. And to mitigate many more expected foreclosures, they need to avoid short sales by keep homeowners in their homes; this could be accomplished through principal balance reductions.
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