renting foreclosed houses to former owners
Posted by WARREN MOSLER on November 5th, 2009
I proposed this when the crisis first hit. Too late for millions of people in thousands of neighborhoods:
“Fannie Mae, the country’s largest mortgage holder, announced today that it is adopting a version of a “right to rent” policy under which foreclosed homeowners will be allowed to stay in their home paying the market rent. Under Fannie Mae’s Deed for Lease Program, foreclosed homeowners will be offered a lease of up to one year, in exchange for turning over the deed to their home. The lease will be at the prevailing market rent.”
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November 5th, 2009 at 10:23 pm
Warren, no surprise your individual creativity front ran Fannie Mae’s institutional creativity. Wonder if Congress might make a percentage of residential lease payments tax deductible to equalize the tax treatment of renters and homeowners? Don’t know what that percentage should be — perhaps the average percentage of interest that comprises mortgage payments less a discount for homes held free and clear? At least a partial deduction for lease payments would mitigate the existing market distortion that encourages people to incur mortgage debt relative to savings, business investment, consumption, other debt, or other economic activity that could enhance aggregate utility. Of course, landlords of tenants that would find such a deduction valuable might then think they could raise rents — but that, in turn, would increase property values, which some people might think is a good idea. Seems a more realistic possibility than phasing out the existing mortgage interest deduction.
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November 6th, 2009 at 8:43 am
Peter Shiff says the maintence and taxes on the houses are going to kill this?
Do you think they are missing this and what would you do?
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