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LOS ANGELES BANKRUPTCY BLOG

Plans to Rent Foreclosed Homes Pick Up Traction

Dec 29, 2011

Several firms, including a few of those that were involved in triggering the housing crisis, have responded to requests from the U.S. government for proposals to rent out foreclosed properties in an effort to address the foreclosure crisis.

The Federal Housing Finance Agency has come up with a plan to seek rental arrangements with companies, to productively handle the hundreds of thousands of distressed properties around the country. Rental demand in several cities around the country has been growing, even as homeowners have lost their homes to foreclosures. The feds are trying to stabilize neighborhoods, and boost declining housing values by converting a portion of distressed properties into rentals. Currently, there is an inventory of about 180,000 repossessed homes.

The Federal Housing Finance Agency had sought proposals from companies which were asked to submit a proposal before September 15. California foreclosure lawyers have noted that a number of companies that have responded to the government's proposal are those that had no mean role to play in the housing crisis, like Fortress Investment Group LLC and Deutsche Bank AG. Other financial and investment companies that have responded include Barclays Capital Inc., Carrington Holding Company, Ranieri partners LLC, and Neuberger Behrman Group LLC. The Federal Housing Finance Agency has received a total of 439 proposals.

According to estimates, by the year 2016, about 6 million homes will be repossessed. These homes have a total current market value of $750 billion. Those are scary numbers that California foreclosure lawyers are looking at, and the federal government hopes to turn to some of these properties into rental properties in order to stabilize property values in these neighborhoods, and bring some sense of normalcy back into the housing market.