Thread: U.S. government wants to rent foreclosed properties

I posted a long article about this over a year ago and I can't find it to add to this.
The article implied, and quoted a government official, that the government through Fannie and Freddie was holding the repo'd homes off of the market with the plan of keeping then for rentals making the government the country's landlord.

That's what they did in Russia!!!

If that is true, the government with the help of the banks has destroyed private home ownership and succeeded in transferring this county from private ownership to that of a government tenant status. The US citizens were financially screwed in the process and their homes to given to more deserving "groups".

2012 is not going to come soon enough.

U.S. government wants to rent foreclosed propertiesMarketplace,

Friday, July 22, 2011

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With foreclosed properties slowing down the growth of the housing market, a new plan has emerged to get the government to rent out houses to investors.


Kai Ryssdal: The housing market is -- stagnant might be a good word. Depressed might be another that you could apply to prices. Rental prices, meanwhile, are on the rise. So the government is looking at a plan to rent out some of the foreclosed homes it owns through Fannie Mae and Freddie Mac.

Nick Timiraos has the story in the Wall Street Journal today. Welcome to the program.

Nick Timiraos: Thanks for having me.

Ryssdal: So lay it out for us: what is this plan all about?

Timiraos: Well the idea here is that the government is selling through Fannie Mae or Freddie Mac or federal agencies tens of thousands of homes every month through foreclosure. And can we get the government to maybe rent them out instead, so we don't have all these foreclosures coming onto the market, driving prices down.

Ryssdal: Is there a way to know, if you take the distress sales out, how much foreclosures are driving down prices?

Timiraos: Well since the housing crisis began five years ago, all home prices have been going down at roughly the same pace -- distressed and non-distressed. But what we've seen over the last six months is if you take distressed sales out of the equation, the price of non-distressed homes actually has stabilized, but all home prices are looking lower now because of foreclosures. The problem is, if you have somebody who's willing to buy your house for $200,000 but there's a foreclosure on the block that just sold for $175,000, an appraiser is going to say well, your house is only worth $175,000. And that can blow up the deal, because the lender's not going to give a loan on a house for $200,000; they're going to say, well, it really needs to be $175,000. That's the problem that foreclosures are creating for housing markets right now.

Ryssdal: OK, but riddle me this: doesn't this, if we do this on a large scale -- because Fannie Mae and Freddie Mac, as you write today, own hundreds of thousands of homes -- doesn't that effectively turn the U.S. government into a landlord?

Timiraos: It would, and that's something that I think government policymakers are very keen to avoid. So one of the things that they're looking at is, is there a way we can do this without actually having to stand in the middle and be the landlord? So you have federal agencies that are very bad at selling the homes anyway, and the question is, could you sell them to investors rather than having to do the regular kind of listings and selling them one at a time? Sell them all to investors and then investors would have to agree to rent the homes as a condition of that sale. And so they would rent them out for a number of years, you can peg it to market conditions before they could sell. And that way, you're getting the benefit of getting these houses off the market, but the government doesn't have to stand there and fix plumbing issues or repair leaking roofs and things that landlords have to do.

Ryssdal: You're cautious in your article today, saying it's just a plan and people are talking about it. Does it have enough support to maybe go someplace?

Timiraos: I think in the next few months we'll get a better idea of whether this can actually move. I think it sounds great on paper -- people like it on paper -- but as we've learned through this housing crisis, a lot of the things that the government will do whether it's mortgage modifications or tax credits or refinancing underwater borrowers, these plans sound great on paper. But when you actually do them, they can get fouled up pretty quickly. So I think we'll see a pile-up project later this year, do a few thousand homes, and if the concept can translate, then they will scale it up.

Ryssdal: Nick Timiraos from the Wall Street Journal. Nick, thanks a lot.
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Federal Government Is Largest Owner of Foreclosed Properties; Over 200,000 and Growing
By Dennis Norman, on June 25th, 2010
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Dennis Norman
According to a report issued by Radar Logic Incorporated government-sponsored enterprises (GSEs) and Federal agencies involved in housing finance currently have an inventory of over 200,000 repossessed homes. Being the largest owner of foreclosed homes in the U.S. gives the government a lot of power and influence over the housing market for years to come as they will generate significant pressure on home prices as they sell off foreclosed homes in the coming years.

Foreclosed homes currently sell at significant discounts to the unpaid balances of the mortgages they back, generating a loss for the seller (i.e., the lender, mortgage investor or government agency) at every sale. As Fannie Mae, Freddie Mac, the Department of Housing and Urban Development (HUD) and the Department of Veterans Affairs (VA) sell their REO (“real estate ownedâ€

btt for later read ..

you can peg it to market conditions before they could sell.

Oh yeah! Gimmee some of this action where the government controls when to sell investments. Wouldn't the investors know best when to sell?