comments_image Comments

The Rent's Too Damn High but It's a Problem With an Easy Solution... If Only

The banking lobby is pushing back against a modest proposal that would ease the squeeze on renters.

Continued from previous page


This would immediately give the homeowners facing foreclosure security in their housing. If they like the house, the neighborhood, the schools for their kids, they would have the right to stay there. It would also end the problem for neighborhoods of empty foreclosed houses. And, it would give banks real incentive to negotiate terms that allow people to stay in their homes as owners.

It's an idea that is getting more attention, as it should. It would cost tax-payers nothing, ease the glut of new renters and avoid the urban blight common to neighborhoods with a high number of unoccupied homes in foreclosure.

As Reuters' Felix Salmon points out, “banks which foreclosed on homeowners would then sell those homes to professional landlords, who would rent the houses out in perpetuity, either to the former homeowner or to renters who moved in after the homeowners moved out. That would raise the amount of rented housing in the US.”

In 2009 and 2010, Raúl M. Grijalva, D-Arizona, introduced a “right-to-rent” bill that went nowhere. But the foreclosure crisis has continued to deepen, and last week Grijalva reintroduced his measure. The bill. HR 1548, would allow homeowners facing foreclosure to petition for the right to rent their homes at current market value for a period of up to 5 years. In order to prevent abuses, the law would only apply to people who had originated their mortgages before 2007 and used the properties as their primary residences for a minimum of 5 years would be eligible.

"Passing this bill will help neighborhoods avoid the spiral of decay, crime and lower property values that often follows mass vacancies without creating any new bureaucracy or transferring a dime of taxpayer money to homeowners or banks," Grijalva told The Nation.

The banking lobby doesn't like the bill, and they helped kill it in the last two Congresses. They say that the law would lead to a wave of “strategic defaults,” as homeowners go into foreclosure to bring down their monthly payments. "Anything making the banks lose money means it's not making other loans in the community," Bob Davis, VP of the American Bankers Association, told the South Bend Tribune . (After shaming ordinary homeowners, another banking lobby, the Mortgage Bankers Association, didn't hesitate to strategically default on its Washington, DC, headquarters when it went under water.)

But as Dean Baker notes, it's a question of showering yet more tax dollars on the very banks that brought about this crippling recession, or helping individual homeowners stay afloat. "Let's just be really clear on this," he told The Nation . "If Congress and the Fed did not step in—Citigroup is out of business today. Goldman Sachs is out of business today. Morgan Stanley is out of business today. The banks got helped out. Now we're going to help people on the other side."

If you agree, you can contact your representatives and let them know you favor HR 1548, the Right to Rent Act of 2011.    

See more stories tagged with: