A Lot More
Observations on housing's wreckage and recovery
Via Felix Salmon, news that Sen. Chuck Schumer is signing on to a proposal to keep foreclosed borrowers in their homes as renters.
I love this idea in principle. It renders literal the all-too-true idiom of overindebted homeowners: “They’re just renting from the bank.”
But in reality? The bill just intro’d in Congress, HR 6116, The Saving Families’ Homes Act, doesn’t come close to answering obvious questions. Who is going to be these now-tenants’ landlords – the mortgage servicers?? Good luck with that one.
And then are we to understand that the now-tenants are entitled to live in their homes indefinitely, for as long as they keep paying the rent? Why should former owners be entitled to a vital protection that most of the nation’s renters don’t have? This kind of unequal treatment is likely to lead to deep anger among many renters, who see homeowners who took excessive risks get benefits that those who prudently chose to rent — because they knew the numbers wouldn’t work — are denied. If you’ll recall, CNBC’s Rick Santelli tried to gin up a case for such resentments when the Obama administration announced its mild loan modification program. But here the sentiments would be real, and warranted.