Alyssa Katz, author of Our Lot: How Our Real Estate Came to Own Us, is skeptical of the proposal to have foreclosed homeowners stay on as renters.
Katz, like the rest of us in this field, is well aware of the value of vacant housing prevention to a neighborhood, but she points out that giving foreclosed homeowners the right to stay indefinitely is more protection than your average renter ever gets and asks “why former owners [should] be entitled to a vital protection that most of the nation’s renters don’t have?” She predicts that resentment against troubled homeowners, which is often misplaced in the face of modest attempts to rescue people with abusive loan terms, would be even stronger, and, she argues, more legit in this case.
I confess to being more concerned about what’s best for the neighborhoods than keeping any individual with getting away with something. (What we’ve let the banks get away with in the name of “financial stability” is mind-boggling.) Besides, still-solvent homeowners and renters in high foreclosure neighborhoods have quite a bit of stake in seeing that those areas are stabilized, and lowering vacancy rates is a prime way to do that.
Still, is there a way to make this work that’s practical and (more) fair? Would offering normal one-year leases (a privilege at least many regular renters enjoy) be enough to encourage ex-homeowners to stay put for long enough to make a difference? Can the landlording be outsourced to a company (or, say, local CDC) that’s good at it? Has anyone heard any reports from Freddie Mac’s modest efforts in this direction?
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I think a lot of the resentment Katz predicts could be alleviated by extending protections to renters, as well as owner-occupants, in foreclosed properties. The overwhelming majority of public and private efforts to alleviate the effects of foreclosure have targeted the latter, although roughly half of occupants in foreclosed properties are renters. By what strange logic do Dean Baker and others propose lavishing new protections on those who, one way or another, got themselves and the country into this mess, while ignoring the plights of those who did absolutely nothing wrong?