After the government’s massive stimulus spending plans, the Obama administration is probably disappointed with the continuing and escalating home foreclosures. The Obama administration announced that they have conceived a new program that would convert potential foreclosures into rentals. A spokesman said it’s reasonable for policymakers to consider options for loan forbearance — allowing borrowers to delay, defer or skip payments — that are more effective than those currently available in the private sector. The idea is to turn mortgage defaulters into renters.

Such a plan would let borrowers who have fallen behind on their mortgage payments, avoid eviction by renting their homes. They’d give up all their equity (what equity?) and future claims on the equity, in exchange for getting to stay in the home. How brilliant! I can see the headlines now: Foreclosures Cut 75% – Obama rescues troubled Homeowners – Obama Cures Foreclosure Problem.

Perhaps the real benefit of such a program will be the banks. Banks, now showing these homes as non-paying liability, would be able to show them as a paying asset. Plus, tens of thousands of troubled homeowners would now be assured of voting for Obama’s re-election so they can insure their handout-living continues. Depending on how the plan works, the government would establish a rental Czar and thousands of government jobs in the new government rental management program. A real win-win situation for everyone . . . except for the taxpayers. *To view the full post, please visit the San Diego real estate market blog.