The Plebian

Pretty Economic Pictures for the Illiterate Masses

Renters Rejoice: The Little Man Catches a Break

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Kit 'N' Carlyle - January 30, 2008

Give Sheriff Tom Dart of Chicago a cookie.  Last October, he made headlines across the nation when he declared that he would no longer enforce the eviction of renters whose landlords had failed to keep up with mortgage payments, a situation that had directly affected thousands in Chicago alone in 2008.

Just imagine getting that knock  on the door from police informing you that b/c of someone else’s negligence you and all your belongings must vacate your home immediately.  Thanks alot.

Needless to say, it was not good PR for gov’t mortgage giants like Freddie and Fannie and after months of twiddling thumbs they have finally announced reforms based on a new concept, common sense.

According to housingwire.com, Fannie “said it would set up property managers and brokers to collect rent on Fannie’s behalf from tenants that sign month-to-month lease contracts on rental homes and units previously owned by investors that had defaulted and foreclosed”.

The article goes on to suggest that collecting rent would recover some losses Fannie takes on when addressing remaining loan balances on foreclosed rental properties.  Additionally, in an era of virtually frozen credit, it would allow Fannie to use rent as a means to address depreciation over time and not accept significantly depressed purchase offers from wary and broke buyers.

In the end, the more losses Freddie, Fannie and the like incur, the greater the burden will be on taxpayers and the more damage it will do to property values on the whole.  Let’s hope that future reforms will also keep the little people in mind

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