Reed Seeks to Convert Foreclosed Homes into Affordable Rental Units, Provide Relief to Victims of Housing Crisis
Economy Won’t Recover Until Housing Sector is on the Mend
WASHINGTON- In an effort to help stabilize the housing market, provide relief to those hit hardest by the housing crisis, and boost the economy, U.S. Senator Jack Reed (D-RI) urged the Federal Housing Finance Agency (FHFA) to come up with a solution that would create value at Fannie Mae and Freddie Mac by converting foreclosed homes into affordable energy efficient rentals that could be pooled together and eventually sold to investors as income producing rental properties.
In a letter to FHFA Acting Director Edward J. DeMarco, which follows a similar letter sent late last year to the Secretary of Housing and Urban Development Shaun Donovan, Reed questioned why so many homes across the country remain vacant while thousands of families are in dire need of housing and urged the agency to take a closer look at the problem in order to create a solution that will benefit those who have been hurt by the housing crisis, reduce foreclosure inventories, and create jobs in some of the hardest hit industries.
Last year, 3,200 Rhode Island families lost their homes to foreclosure, and the average monthly rent for a 2-bedroom apartment in the state has increased by 54% since the year 2000, while unemployment in the state remains the third highest in the nation.
“The number of vacant foreclosed homes waiting to be sold at depressed prices is increasing at the same time that the demand for rental properties is increasing. It would appear that an answer to both of these problems could be found by analyzing these problems together. We all need to be more proactive and creative in finally healing the housing market. Until there is a greater focus on getting housing right, we won’t be able to anchor a sustainable economic recovery that actually reaches and helps the middle class,” said Reed, a senior member of the Banking, Housing and Urban Affairs Committee.
Reed’s proposal seeks to increase the resale value of these foreclosed homes for Fannie Mae and Freddie Mac by turning them into profitable rental units that could be sold to the private sector. Additionally, by calling for the retrofitting and renovation of these homes, much needed jobs would be created during these tough economic times.
“Rather than selling these vacant foreclosed homes at fire sale prices, we should be seeking ways to increase value for Fannie Mae and Freddie Mac. This proposal offers one way to do just that,” concluded Reed.
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