Original posted on the Housing Wire by Austin Kilgore:
Borrowers who have exhausted all options for saving their homes may be thrown yet another retention lifeline, if House Democrats are successful with recently introduced legislation.
A bill filed in the US House of Representatives would allow mortgage borrowers to remain in their homes, as renters, for up to five years after receiving a foreclosure notice.
The “right to rent” bill, House Resolution (HR) 5028, would allow borrowers to petition a judge to stay in their homes as renters under a lease for up to five years. The judge would be empowered to appoint an independent appraiser to set fair market value, which would be allowed to rise with inflation, Representatives Raúl Grijalva (D-OH) and Marcy Kaptur (D-OH) said in a joint release. The bill is an updated version of a similar bill Grijalva introduced in 2008.
Grijalva said reports of increased foreclosure activity are “an indication of the profound, historic crisis we face and the need for creative solutions like Right to Rent. I’m proud to work with a champion of workers’ rights like Marcy Kaptur to address this problem, and I call on the rest of Congress to take a hard look at why we’ve allowed things to get this bad.”
While the Making Home Affordable Modification Program (HAMP) continues to make some effort in attempts to prevent foreclosures, Grijalva said it is not enough.
“HAMP is simply an insufficient response to this crisis,” Grijalva said. “Right to rent is a fair and sensible solution for struggling homeowners. Banks will still get reliable rental income, and families will be able to stay in their homes and significantly lower their monthly housing costs.”
The right to rent program would be limited to homes purchased at or below the median price for its metropolitan statistical area, and must have been the borrower’s principal residence for no less than 2 years. Only mortgages originated before July 1, 2007 will 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 said.