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Will Uncle Sam be your next landlord?

[Aug 10, 2011.]


The U.S. government is looking for ideas on how to turn some of the nation's foreclosed properties into rental homes. The idea behind the move is that getting renters into some of these homes could help move the housing market in the right direction.

Looking for proposals

The Federal Housing Finance Agency (FHFA), working with the Treasury Department and Housing and Urban Development (HUD), issued a Request for Information (RFI) seeking input on ways to sell single-family real estate owned (REO) properties held by Fannie Mae and Freddie Mac. Options being solicited include finding ways to support rental and affordable housing.

HUD Secretary Shaun Donovan said in a statement:

Millions of families nationwide have seen their home values impacted as their neighbors' homes fall into foreclosure or become abandoned. At the same time, with half of all renters spending more than a third of their income on housing and a quarter spending more than half, we have to find and promote new ways to alleviate the strain on the affordable rental market. Taking steps to encourage private investment in REO properties and transition them into productive use will help stabilize neighborhoods and home values at a critical time for our economy.

Homeowners can't pay mortgages

Foreclosures have plagued thousands of homeowners who could no longer afford payments on mortgage loans. Fannie Mae and Freddie Mac sold 100,000 homes during the second quarter, according to the Wall Street Journal. At the end of June about 830,000 homes backed by Fannie Mae, Freddie Mac and the FHA were in the foreclosure process.

During the first half of 2011 there were 1,170,402 U.S. properties that received foreclosure filings after homeowners fell behind on home mortgage payments, according to data from RealtyTrac. Housing experts say there could be even more foreclosures flooding the market going forward as borrowers deal with job losses, weak home sales and slipping consumer confidence.

"Processing and procedural delays are pushing foreclosures further and further out--we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later," James J. Saccacio, chief executive officer of RealtyTrac, said in a recent statement. "This casts an ominous shadow over the housing market, where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number."


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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