New legislation that would allow struggling homeowners to rent their homes would slow the foreclosure rate, according to a report from the Center for Economic and Policy Research (CEPR).
“With roughly one-in four mortgages underwater, the loan modification plans put forth so far have done little to help homeowners facing foreclosure,” said Dean Baker, Co-Director of CEPR and an author of the report, in a release.
“Right to Rent, on the other hand, would benefit millions, provide families with real housing security, and could go into effect immediately.”
The report analyzed the costs of renting versus owning a home in a number of major metropolitan cities and found that it’s often much lower than the cost of ownership.
“Ordinarily, the gap between owning and renting is not that large.” added Baker. “Due to the enormous run-up in house prices over the housing bubble years, however, ownership costs now vastly exceed rental costs in many of the bubble markets and homeowners in these markets have much to gain from having the opportunity to remain in a home as a renter following a foreclosure.”
The “Right to Rent” legislation, or HR 5028, sponsored by representatives Grijalva (NM) and Kaptur (OH), would temporarily ease foreclosure laws to let foreclosed borrowers stay in their homes as renters for a “substantial period of time.”
The plan requires no taxpayer funding and “no new bureaucracy” to implement.
But they’ve been outweighed by more than 600,000 dropouts from the program.