Plan would turn foreclosures into rentals
People look at a foreclosed home on August 29, 2010 in Seymour, Conn.
JEREMY HOBSON: Today the Obama administration will formally ask the public for ideas to help clear out the nation's stock of foreclosed homes and fix the housing market. The most prominent idea in the mix: turning foreclosed homes into rental properties.
Marketplace's Jeff Horwich reports.
JEFF HORWICH: A foreclosed home is a problem for the neighbors, the bank that owns it, certainly the family that lost it -- but it's a problem for the rest of us, too. Banks price them at rock-bottom to get rid of them, and that depresses prices for the whole market. The government, through Fannie Mae, Freddie Mac, the Federal Housing Administration -- own hundreds of thousands of foreclosed homes.
Nicolas Retsinas heads the Joint Center for Housing Studies at Harvard. He says these government entities are looking for ways to entice investors who will to turn the foreclosures into rentals.
NICOLAS RETSINAS: The problem with that is the price investors would require to make the numbers work, to make the economics work, would require the government to take very significant up front losses.
While the plan may help reduce the foreclosed homes on the governments books -- and juice the market accordingly -- about half of unsold foreclosed homes are held by private banks.
I'm Jeff Horwich for Marketplace.