April 5, 2012, 5:55 PM
Fed Blesses Banks’ Foreclosure-Rental Approach
By Alan Zibel
Reuters Federal Reserve Chairman Ben Bernanke
The Federal Reserve set out new polices for banks that decide to rent out foreclosed homes, endorsing a strategy for managing the huge number of distressed properties that have piled up during the housing bust.
The central bank said in a six-page policy statement Thursday that the Fed’s regulations permit the rental of foreclosed properties to tenants “in light of the extraordinary market conditions that currently prevail.” The policy clarified that banks that would otherwise be required to sell off the properties more quickly can turn to rental as a strategy.
Banks can do so “without having to demonstrate continuous active marketing of the property provided that suitable policies and procedures are followed,” the central bank said. The shift to rentals is a significant change in the way banks deal with properties that fall into foreclosure – if loan assistance programs don’t work.
Federal Reserve Chairman Ben Bernanke and other central bank officials have spoken publicly about the need to encourage banks to rent out foreclosures. “With home prices falling and rents rising, it could make sense in some markets to turn some of the foreclosed homes into rental properties,” Mr. Bernanke said in a February speech.
The central bank said that banks holding large numbers of foreclosures should establish detailed policies for renting foreclosures, including a process to determine whether the properties are safe to occupy and meet local building code requirements.
The Fed said banks should set up criteria by which properties are picked to be rental properties. The banks should establish plans that “describe the general conditions under which the organization believes a rental approach is likely to be successful,” the central bank said.
Last month, Bank of America Corp. announced a plan to allow homeowners at risk of foreclosure to hand over deeds to their houses and sign leases that will let them rent the houses back from the bank at a market rate.
In addition, Fannie Mae is selling 2,500 homes in eight metropolitan areas around the country. The government-controlled mortgage firm is selling the $320 million portfolio to investors, who would be required to turn them into rental properties.
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It never ceases to amaze me….
First the banks screw the people with toxic loans.
They sale the Note, and then Sale the Deed to someone else, make a whole hell of a lot of money.
Then it is just a matter of time until these pick a pay loans, or negative am loans, adjustable rate loans, get to where you can no longer make the payments, no matter how much money you make. Face it, the payment went into default when you made your first payment if you had a pick-a-pay loan, you started out making payments that were less than the amount of interest each month.
The homeowner defaults, the banks, who cannot foreclose, due to having sold the Note to one entity, and the Deed to another entity, so they have LPS, DocX, CoreLogic, Prommis Solutions, or some other unsavory 3rd party default services entity, create falsified, robo-signed and forged documents, because ain’t no way in hell, they’re going to let your house get away.
The Bank then forecloses, no matter what they have to do, they will do it to get that home.
Then…what are they going to do with yet another home? Of course, the one with the most homes in the end wins.. but we still have a ways to go before then. In the meantime, different areas are coming up with fees for having houses sitting with no one living in the homes.
BRAINSTORM!!! RENT IT OUT!!!
So they stole your home, bought it themselves at the auction, turned the paperwork into the Insurance, got 80% of the amount you defaulted on, and they can either sale it (but there is no one left that can get a home loan, they have done foreclosed on them all) or Rent it out. Just think!!! When they get used to the idea, they will be renting you your house, foreclosing on you and selling your house in one swift easy move.
Hell, they should just take your house from you, let you stay there, and change it from house payment to rent, without having to do any paperwork or anything…kind of like the issue of not having the needed documents to foreclose on you. They will wipe out the need for a Promissory Note and a Deed, they will keep you in your home by renting it to you.