The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices, according to the Richmond Times Dispatch.
The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration.
The government rescued Fannie Mae and Freddie Mac in September 2008 and has funded them since the financial crisis. They own or guarantee about half of the nation’s mortgages and nearly all new mortgages.
At the end of last month, the government owned roughly 248,000 foreclosed homes, officials said. About 70,000 of those are listed for sale, but officials expect the number of foreclosures to soar in the coming months.
Many foreclosures have been stalled so attorneys general and federal regulators can investigate whether lenders cut corners and improperly handled thousands of cases.
Once a settlement is finalized, foreclosures are expected to pick up and further depress home prices.
Converting the homes into rentals may reduce “credit losses and help stabilize neighborhoods and home values,” said Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.
Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices of surrounding homes.