About Government Refinance and Home Purchase Programs

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Diane Golobay over at Housing Wire wrote a nice piece on the recently passed HR 2529 bill in congress. Here is an excerpt:

The House of Representatives this week passed a bill that would authorize federally-insured depository institutions and banks to lease real estate-owned homes for a limited period of time — up to five years.

The House approved HR 2529, the Neighborhood Preservation Act, in a voice vote Wednesday. The bill’s language allows banks covered through the Federal Deposit Insurance Corp. to lease back houses it owns through foreclosure.

By allowing these institutions to enter long-term leases with occupants of the foreclosed property or other parties to restrict the number of houses moving onto the market, the bill aims to keep unsold inventory down and in turn help stabilize home values and restore confidence in housing markets. It would also generate monthly payments and ultimately reduce the extent of the loss taken by the bank upon the property’s sale.

Of course the problem with this bill like many before it is that the program is voluntary for the banks. Who knows if the banks would prefer to be landlords rather than just unload the house.

Of course the bill would need to pass the Senate and the President to becomes law. It is not yet clear to us why a law would be needed to allow banks to use this plan in the first place. Perhaps there are rules now that preclude FDIC banks from renting out the homes they have foreclosed on. We’ll keep you posted on this.

Comments (0) Posted by G.R.A. Admin on Thursday, July 30th, 2009

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