From the Associated Press:
The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.
The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent roughly 250,000 homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration. All of the homes are foreclosures.
The U.S. government rescued the two mortgage giants in September 2008 and has funded them since the financial crisis. Fannie and Freddie own or guarantee about half of the nation’s mortgages and nearly all new mortgages.
Converting the homes into rentals may reduce “credit losses and help stabilize neighborhoods and home values,” said Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees Fannie and Freddie.
Fannie and Freddie have been hoarding foreclosure inventory in Phoenix for months. Now I know why. Witness:
It also might meet the growing demand for rentals.
So would selling them, except then they would be owned and managed by people who are working for profit, not political functionaries.
But wait. There’s more:
Private investors could also be allowed to oversee the conversions.
That is to say, all the best Fed-friendly butt-buddies will be cut in on the graft.
And you thought the Federal government could not screw the housing market up any worse…
Sean Purcell says:
I read that this morning too Greg, and nearly choked on a mouthful of Cheerios… They’ve been trying to work their way into this position for some time now. Reading your post brought my back to The Deeds For Lease Program that I wrote about right here back in 2009.
If the over-riding idea (or philosophy) is this: We know best and the whole shootin’ match will work better once we control everything, then their current thought must be: “It’s hard to really control the means of production, if you don’t own the fruits of production first.”
Once centralized power has a good strong foothold on the ownership of property (the fruits of production), what incentive will be left to actually produce?
August 10, 2011 — 4:52 pm
Chris K says:
“Fed-friendly butt-buddies”, nice one.
Anyways, if the government ends up selling (keyword being selling) the homes to a group of investors it will do two things:
1. Get part of the shadow foreclosure inventory off the market helping to stabilize prices
2. Get these properties out of government control and into the hands of people that know what to do with them.
August 11, 2011 — 11:27 am
Danny Welsh says:
Great post Greg. I totally agree with you comment Chris, on the Government selling the homes to investors. Great share.
August 13, 2011 — 6:38 am
Tom Wolf says:
Although I wish I had some concrete figures, based on my own experience and that of my close peers, a significant percentage of the buyers right now are investors, who of course are renting the homes out after the purchase. This move would pretty much guarantee an end to that segment of home purchases, as the flood of new rentals would do exactly what the government wants, which is to lower rental prices.
August 14, 2011 — 3:58 pm