photo credit: dougww

In January of this year, the government was considering buying up all Fannie Mae, Freddie Mac, and the FHA's distressed properties on the market and subsequently renting them out. They would then hold the properties for five to seven years until the housing market rights itself once more and they can sell them. An analyst at Goldman Sachs estimated that this program "would boost housing prices 0.5 percent over the first year and one percent the second year. But Loren Berlin of the Huffington Post has brought up three impediments Goldman Sachs sees to this rental program's success:

• Some of the properties in question would simply remain vacant. Why? Because no one would want to rent them.
  
• If these distressed properties were in fact turned into rentals, it wouldn't cut the number of homes on the market because lenders would just replace these houses with others from their inventory.
• Almost half of Fannie Mae and Freddie Mac's properties are, matter-of-factly, unsuitable for rental.

This idea brings up a somewhat obvious question, though -- if these properties would make good rentals, why haven't they already been sold to investors? Clearly, the government still has much work ahead if they still wish to move forward with this REO-to-rental idea.

Read the complete article.