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Will Renting Foreclosures Stabilize the Housing Market?
 
 
Will renting foreclosures stabilize the housing market?  I don’t think so—and here’s why:
 
 
 ●  Although the Administration is currently seeking input on its plan to offer government-owned foreclosures for sale in bulk to large investor groups, it seems unlikely that the plan will boost home prices as suggested.  Furthermore, bulk sales will lower the return to taxpayers already on the hook for billions in losses at Fannie/Freddie and FHA.
 
●  Increasing the number of rentals in a neighborhood often results in lower average prices for existing owners and less neighborhood stability.   
 
●  Discounting foreclosures in bulk would further lower neighborhood values, which could place existing homeowners at risk of being “underwater,” increasing the likelihood of additional defaults. 
 
●  Investors buying large groups of foreclosures will be looking to minimize their overhead.  It’s unlikely they will maintain the homes to the degree that owners would.  And while the FHFA has indicated that proposals for property management will be a factor in approving such deals, the bureaucracy is notoriously lax in providing proper oversight of any of its programs.
 
●  The opportunities for fraud and abuse will undermine any benefit, with taxpayers and neighborhoods becoming the ... more

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