Posted by Jonathan J. Miller -Monday, December 15, 2008, 1:02 AM
Don’t fulfill your contractual obligations and you get bailed out.
Fulfill your contractual obligations and you get evicted.
That’s the way the process has played out.
Chauntay Barnes, 30, moved into a single-family home with her two kids in November 2007 on a quiet street in Hamden, Conn. She never missed a payment on her $800 rent â€” never had so much as a late fee â€” and yet in mid-September she opened her mail to find an eviction notice.
If you are going to solve the housing crisis, you can’t treat tenants who met the their obligations as a throwaway. Fannie Mae is going to work with some tenants to prevent eviction. Still, only a fraction of the evictions will be prevented.
In a move that provides relief to thousands of renters who face eviction but draws the federal government even deeper into the housing market, the loan giant Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company.
In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. In many cities and states, renters can be evicted after their home goes into foreclosure, regardless of how long their lease stretches into the future.
Yes, properties may be easier to market when vacant, but the reality is the property will likely see extended marketing times with the surplus inventory levels. Why not keep income coming in to the taxpayer while the market finds it groove?
â€œWeâ€™re not in the business of managing rental properties, and weâ€™re not in the business of being a landlord,â€ said Thomas Kelly, a spokesman for JPMorgan Chase, which owns about two million loans. â€œClearly the renter is caught in the middle in cases like this. When a property is in foreclosure, we follow the law.â€
When will the renter stop being treated like a second class citizen? Is the American dream of homeownership myopic?
Aside: The National Community Reinvestment Coalition, a consumer advocacy group has an amazing public relations sensibility. I would guess that coverage of this issue in the NYT and WSJ was a perfectly placed pitch. Kudos to them on this important issue.