Congress Takes First Step Towards Allowing Foreclosed Homeowners to Stay as Renters

For Immediate Release

CEPR
Contact: 

Alan Barber, (202) 293-5380 x 115

Congress Takes First Step Towards Allowing Foreclosed Homeowners to Stay as Renters

WASHINGTON - In a voice vote, the House today approved the Neighborhood
Preservation Act (HR 2529) which would explicitly authorize
institutions insured by the FDIC to allow foreclosed homeowners to
remain in their homes as renters on long term leases. This measure
would remove any legal issues that could be raised if a bank were to
voluntarily enter a rental agreement with a foreclosed homeowner.

While this measure may allow some number of homeowners to stay in their
homes as renters, it is unlikely to benefit the vast majority of
homeowners who are facing foreclosure, since the decision to allow
homeowners to become long-term renters will be left with the bank. If
Congress does want to give foreclosed homeowners the option to stay in
their homes as renters, it will be necessary to pass legislation that
explicitly gives them this right.

Given the limited impact to date of the various mortgage modification
programs that have been put in place, a Right to Rent law seems the
only plausible route toward providing homeowners with security in their
house.

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