Right to Rent Plans Offers Simple Solution to Foreclosure Crisis

[babylonsister]

http://www.commondreams.org/newswire/2009/07/16-21

FOR IMMEDIATE RELEASE
July 16, 2009
4:22 PM


CONTACT: Center for Economic and Policy Research (CEPR)
Alan Barber, [phone] x 115
Right to Rent Plans Offers Simple Solution to Foreclosure Crisis


WASHINGTON - July 16 - In the face of mounting frustration over the nation's soaring foreclosure rate, the Obama administration and Congress are exploring a handful of options to offer families relief from the current housing crisis. Of these options, one policy has emerged that offers an easy, straight-forward means of ensuring housing security for millions, the Right to Rent Plan.

Acknowledged as a means of keeping families in their home while helping to alleviate the neighborhood blight of soaring foreclosures, this proposal has already been endorsed by several members of Congress and enjoys support from both the left and the right.

The Right to Rent Plan, first proposed two years ago by Dean Baker, Co-Director of the Center for Economic and Policy Research (CEPR), would allow families facing foreclosure to rent their homes at the market rate for a substantial period of time. The market rent would be determined by an independent appraiser in the same way that homes are appraised when banks issue a mortgage.

"The Right to Rent Plan is simple," says Baker. "It can take effect immediately, it requires no taxpayer dollars, and it creates no new bureaucracy."

Late in the last Congress, Rep. Raul Grijalva introduced the Saving Family Homes Act, based on the Right to Rent Plan. Other members of Congress have voiced support for the plan, including Sen. Charles Schumer and it is consistently mentioned as one of a few proposals currently being considered by the White House.

The full details of the plan can be found here:

http://www.reuters.com/article/euRegulatoryNews/idUSN1429055220090714
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The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.

[MercutioATC]

1. Big potential for abuse....and for uselessness.

Depending on the market, it can be either more or less costly to rent than to own.

In a market where it's cheaper to rent, somebody could buy a house, default on the mortgage, and continue to live in the house with a lower housing payment.

In a market where it's cheaper to own, the "fair rent" on the property could well be more than the moirtgage payment...offering no benefit.



This hasn't been well thought out.

[babylonsister]

2. And it could save people from being homeless. That's the point.

Sorry if I can't find any negatives in that.

Sure, there's potential horrors in anything new, but there's also the flip side. We should stop trying to make this situation better?

[katandmoon]

4. What will people who can't afford to pay their mortgages, use to pay rent with?

[solstice]

3. If they can't afford to pay a mortgage, how can they afford rent? And what happens to them when

the house is sold out from under them?

This is NOT a solution, but it IS more of the same "now let's not offend the banks/mortgage companies because they own my ass" policy from Obama.

[babylonsister]

5. Rent would probably be cheaper, for starters, given the

price of property values now. If they're renting at a lower rate, the house won't be sold. But your negative post is noted, as usual.

[solstice]

7. And your non-answer is noted.

[babylonsister]

11. No non-answer, and why don't you read the links? If a homeowner

is in arrears on their mortgage, by renting that amount will be forgiven. They'll still have a roof over their heads. Is that too difficult to comprehend?

Here, give it a go. And I pretty much figure you're in no trouble, which is why you can dismiss it so cavalierly.

http://www.reuters.com/article/euRegulatoryNews/idUSN1429055220090714?sp=true

[MercutioATC]

9. I can easily BUY a 1500 sq ft house for $100k in my area.

That would be a $665/month mortgage payment on a 30-year, 7% note.

Market rent for the same property is $900-$1100...plus, I'd lose the mortgage interest deduction.


Renting is frequently more expensive than owning.

[dysfunctional press]

14. "If they're renting at a lower rate, the house won't be sold."

what does the rental price have to do with whether the house would be sold to someone else?

[Top Cat]

15. You post is really F-ck up where would you have them to live on the street.

A rented house would be better for the neighborhood than a foreclosed house. So you obviously don't give a damn

[Engineer4Obama]

6. What about renters who have been diligent

in their rent and their landlords haven't been paying the bills? Would this cover them as well?

[grasswire]

10. we're losing our home to that

The landlady hasn't paid the mortgage since September 2008. She owns multiple rental properties that are in foreclosure, and has pocketed hundreds of thousands of dollars of rent monies.

We tried to stay in the house to negotiate with the bank on the steps of the courthouse, but she has demanded that we leave. We have eight more days.

There needs to be a prohibition on no-cause eviction of renters when a house is in foreclosure. Other protections exist.

She apparently intends to do the cash for keys with the bank and also cut us out of our deposits.

[billyoc]

8. I prefer a "squat for a year and save all your money, then split, leaving the bank holding the bag"

approach, myself.

[flvegan]

12. How is this so difficult? Jesus.

So now folks lose whatever ownership they have, and the bank owns the house. Maybe folks are more at ease with eviction than foreclosure, I don't know.

What gets me is that these are alleged economists making these plans. How hard can it be to force the lenders to alter their terms? Lets assume that a good number of those going into foreclosure are due to resets or an adjustable rate. Okay. Here's my proposal:

Subject A owes $150,000.00 on their home. Their loan is now at 9%, which is roughly a $1200.00 payment which they now can't afford. They have a job and would be able to utilize the "rental" plan being discussed. Why can't the bank be told, rather than allowed to take fee simple title, they have to adjust the rate. So, Subject A has the note adjusted to 4%. That's roughly $700 and change. Reasonable, and the bank is still making money and Subject A gets to keep their home.

Lastly, do I really want some huge lender (who may or may not know they hold my note) responsible for taxes and insurance? And who do I call at Bank of America when the a/c goes out? They ARE the new landlord. And since we're talking about lenders likely massively missing taxes because MERS is unreliable for tracking loans, when the predators start circling and buying the Tax Deeds what happens? Yeah, you may have your lease for X years (if and only if you have more than the average tenancy lease), but then you're guaranteed to get tossed out.

While I'm at it, if the mortgage goes through foreclosure, goes to Certificate of Title and the borrowers are allowed to rent for X years, if the borrowers are allowed to, at some point be again vested in title, what happens to the prior interests (like a second mortgage, tax liens, judgments, etc) that were wiped out? Are they effective again? If so, is their interest now superior? Or worse. If the mortgage "converts" to title, does the lender have to pay those inferior interests as well? Matter of fact, if the mortgage "converts" to title without foreclosure, those interests would be superior and could then foreclose if defaulted upon.

Doesn't sound very good to me. My idea sounds brilliant in comparison.

[lunatica]

13. In the Bay Area rents are much higher than mortgages gotten 15 years ago

In exactly the same condo complexes. If I rented my payment would probably double or go even higher. If I get to the point where I can't afford my mortgage I sure as hell won't be able to afford a higher rent.

Of course, they're talking about people who are newer buyers and who owe more than the house currently worth. I'm not in that situation. I believe my condo is worth more than my mortgage loan so far. I also think that eventually the worth will go back up, though hopefully for the future it won't go up insanely like it did for the last 20 years.