Foreclosure Properties Could Become Government Rentals

Foreclosure properties are commonplace in every region across America. With the collapse of the economy and the housing market by extension, many neighborhoods have seen an increase in repossessed homes lining their streets. In Washington, talks regarding economic rejuvenation have resulted in a new government approach: rental property.

The U.S. bailout rescued Fannie Mae and Freddie Mac in 2008, thanks to government funds that continue to support their infrastructures, including repossessed homes. In fact, half of the nation’s mortgages are owned by one of the companies. In the wake of debt ceiling negotiations, the question of how to handle the 248,000 foreclosures among them. With a deadline of September 15, federal regulators are continuing to weigh the benefits of renting foreclosure properties to lessen the national debt.

In addition to reducing the burden of failed mortgages, the new rental plan could have a significant impact on the housing market’s stability. It is no secret that foreclosure properties can bring down the value of a neighborhood. Empty homes and uncut lawns make it difficult for real estate agents to sell an area in addition to a property. Under the rental proposal, foreclosure properties would avoid abandonment with the help of the Federal Housing Agency (FHA), which would offer them to applicants at a discounted rate. This strategy could have a number of positive effects, including:

  • Reducing credit losses and federal debt
  • Stabilization of neighborhoods and surrounding home values
  • Addressing the growing demand for rentals. Nearly 3 million households have switched to renting since 2008, and another 3 million are expected to follow suit by 2015.

While it is not yet clear whether new legislation will help homeowners in dire straits, those looking for a new home can hope for FHA rental options in addition to buying. Keep your eyes open in the coming months; big market changes could mean big savings for consumers.

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