Felix Salmon is keeping up the drumbeat for Own-To-Rent. In case you missed the previous posts from me on this bad idea (here and here) are the links.
Felix notes that there’s already been a bill introduced by Rep. Raul Grijalva. If you click through you will see that the bill has been gathering dust for about two months — the PR piece from Rep. Grijalva is dated May 22.
In addition to forcing investors who end up taking back homes into becoming long-term landlords, Felix would also like to see renters protected. In other words if you rent a house from someone who loses their house to the bank, you get to stay. Too bad if the bank would prefer not to be in the rental business.
Yeah, I know the bank can sell the house if they want to, they just can’t kick out the occupant. As I said before, this eliminates the entire universe of buyers that are looking for a house to live in. The only potential buyers by definition would be investors who are sure to beat the prices down further as they realize how little competition there is for these properties.
Creating a sea of rental homes is no solution. The solution is to clear the market via modification when it works and foreclosure and resale to any buyer when the modification approach fails.
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