The voice of reason: What is your best idea for Obama to help Fannie/Freddie? Fannie and Freddie need to stop the bleeding and need your ideas. What is your idea? Here is mine. Create a three-tier rental plan on all these vacant or foreclosed homes. Rents at $500, $750 or $1,000 a month depending on the value of the property and income. Do six-month or one-year leases depending on how much time they need to foreclose, sell the paper, or sell the home. Work with local Realtors to manage. Tenants pay for the utilities and upkeep. A tax credit or rent-to-own program could be established. Below-market rents would go a long way to providing an opportunity for renters/potential homeowners to secure a property to live in. Those that are not paying need to pay or be evicted. This would create revenue for the government instead of spending billions on management and upkeep costs and digging even a deeper whole. If Obama implements my idea, I want my mortgage paid off in full.
Ssfranny1: Bingo. I've been saying a government FHA sponsored "rent to own" program for a house in or at risk of going into foreclosure would help stabilize prices and get many people back into a house after a couple years of paying on time. Set it like they did for HAMP—make the rent payment 28% of gross income and a portion of rent payments will be set aside for a tax credit to pay for closing costs and whatever is needed. Get HUD to get the lenders back into 203(k) programs. If a person can buy a foreclosed house and get money to fix it up you would get many of these houses off the market.
Hey everyone, look at me!: So you would cap out at a $1,000 month on a rental? Section 8 is already a drain and now you want the government to become a landlord? How do you come up with this stuff?
The voice of reason: Something is better than nothing. So put in a fourth tier at $2,000 a month.
Ssfranny1: So what's your idea? Maybe another program like HAMP or HAFA? Only postpones the inevitable. What are you going to do with millions who lost their house due to short sale? Have them sit on sidelines for three years while making it next to impossible for the first-time homebuyer to get into a house unless they have perfect credit? I say morph Fannie/Freddie into FHA or model after them. Or just scrap altogether.
JackStraw: Offer the homes in bulk or individually at auction starting at 25% of the mortgage balance and get this stuff off the books.
Brokerjack: Obama could resign. That would help make me feel better. Realistically though, no one is buying anything without a job. Get folks employed and they'll buy some homes. That will reduce inventory. Quit the manipulations of the markets so that they can correct themselves and we can get private money back into the game. The new money will create competition and will put common sense lending back into business.
Frank-barnett: I've thought you should offer some kind of rental option to folks being foreclosed on. Helps potentially minimize the disruption. As others have said, the best thing is to get people employed, and that is not happening until we get serious on the trade front and stop letting certain countries rip us off.
Lil_oh_me: Homeownership is not an entitlement. Until current homeowners and prospective homeowners have reliable ability to pay their debt and exhibit a willingness to honor their obligations to lenders, their communities and ultimately to themselves you will continue to realize ever increasing inventories of residential real estate. If the ability to pay is not there it matters not if it is a mortgage payment or a rental payment. For that matter Washington best understand deficit spending to the point where we cannot as a nation pay the interest is sheer foolishness. We've got bigger problems than simply fixing the housing problem. This recklessness threatens national security. If you really want a revolutionary idea follow the example of Nehemiah. We forgive all debt. All the books are wiped clean and we start fresh. The resignation of Obama would leave us with Biden. Obama can be contained while Biden is a loose cannon.
