The Real Deal Miami

Feds consider rent plan to prevent evictions

July 15, 2009 01:44PM

Federal officials at the Treasury Department are considering a plan
that would allow borrowers who are behind on mortgage payments to avoid
eviction by renting their homes instead. Under the plan proposed by
economist Dean Baker of the Center for Economic Policy Research, a
bankruptcy judge would help determine a fair rent for the property.
Banks would be able to sell the occupied homes, but the lease would
remain in effect even if the ownership changed. Officials are still
figuring out how to replace a loan with a rental lease without
disrupting the overall mortgage market. Two possible methods that are
being considered by government officials are paying cash to
mortgage-service companies to take part in the new program or selling
homes to a third party that would write rental agreements.