> (email exchange)
> On Mon, Mar 1, 2010 at 3:40 PM, wrote:
> Hi Warren,
> I believe this is along the lines of your idea a while back to mitigate the
> foreclosure problem by having the US Gov’t step in and take ownership of the
> real property and rent the home to the current homeowners. I was sifting
> through this Goldman piece about GSE reform and it looks like Fannie may be
> already doing this in a program called ‘deed-for-lease.’ Were you aware of
The largest landlord in the nation? How the GSEs deal with loans headed for foreclosure is critical. According to the recent announcement, these loans will be held in their retained portfolios. However, moving this many loans into the portfolio—worth at least US$300bn—would threaten to violate the caps put in place by the Treasury (see Box). One way out of this situation would be to take ownership of the collateral, thereby converting loans, which count against the cap, into real property, which does not. With close to 2 million current and expected delinquent loans this year, how the GSEs dispose of this property will become an important issue. The GSEs will be under political pressure to hold property off the market, and may be inclined to do so in any case if they see property values bottoming. This could mean renting the properties: in November 2009, Fannie Mae announced a ‘deed-for-lease’ program, which allows homeowners to relinquish ownership of the property and rent it instead. In January, Fannie Mae took another step in this direction with the announcement of a policy to allow tenants in Fannie-Mae foreclosed property to rent the property on a month-to-month basis after foreclosure.
Yes, heard they were trying it late in the game, without many takers, but good that they at least did some, thanks!
Prof James Galbraith had presented the idea a year or more ago to a congressional committee. Don’t know if that was the source or not. Never did get any feedback.