As a glut of foreclosures on the market weighs down home values across the country, a bipartisan bill introduced this week in the House proposes a solution to reducing the high inventories: Rent the properties out.
The proposed bill, Neighborhood Preservation Act of 2011 (H.R. 2636), calls on banks and the government-sponsored enterprises--Fannie Mae and Freddie Mac--to start renting out some of their foreclosed properties to reduce REO sales and “stabilize home values and restore confidence in the housing markets.”
The bill would authorize federally-chartered institutions to enter into a long-term lease -- for up to five years -- with the occupant of the property or with another person, and then at the end of the agreement provide an option to buy the home to the tenant.
The bill could allow delinquent borrowers to remain in their homes but they would have to agree to pay rent and still sign over the deed to the bank or GSE, National Mortgage News reports.
According to the bill, this would allow the foreclosed property to remain occupied during the still-sluggish housing market and “preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.”
"As Americans across the country are affected by this unrelenting foreclosure crisis, it is imperative that Congress address this issue," Congressman Gary Miller, R-Calif., who introduced the bill, said in a statement.
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