Own-to-Rent With One of Its Progenitors: Dean Baker…LIVE!

March 24th, 2012 at 5:02 am

As I noted in a post from last night, good for BofA for launching a pilot program of Own-to-Rent, a good way to prevent folks facing foreclosure from losing their homes.  My friend and colleague Dean Baker’s been touting this idea since 2007 and he was kind enough to come in a discuss it on air with me today.


(And h/t to producer CW.)


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7 comments in reply to "Own-to-Rent With One of Its Progenitors: Dean Baker…LIVE!"

  1. tom says:

    Great discussion, guys.

  2. rjs says:

    ok, lets say the basement floods when sewers back up in a storm, maybe there’s no insurance, furance & appliances are damaged…who does the repairs? when?

    what about minor repairs, like a stopped drain or broken door lock?

    are the banks set up to manage property like a normal landlord, or are they counting on the homeowners to cover for them?

    • Jared Bernstein says:

      They’ll outsource the maintenance–but that is a concern.

      • PeonInChief says:

        Banks have been managing rental properties for a long, long time. Their trust departments do it all the time. Some banks keep it in-house, with their own employees assigned to collect rents, manage repairs, deal with vacancies etc. Others hire property management firms to do this. This “problem” was raised when Baker first proposed own-to-rent, and it’s entirely specious.

        Indeed, in many cases, landlords depend on tenants to make appointments for repairs, and either have the bill charged to the landlord or, in the case of cheap repairs, have the tenant pay the bill and deduct it from the next rent payment. Tenants are often grown-ups, and we can call the plumber all by ourselves.

  3. perplexed says:

    I must admit that I found myself hoping towards the end of this video that you guys were going to provide some tips on how to get a hold of some of whatever it is that you were smoking prior to making this.

    Its hard to believe that after all that’s come out about this, we are not immediately questioning how anything that Bank America (Countrywide) is in favor of, is highly likely to be a huge benefit to Bank America at a substantial cost to everyone else involved. Have we already forgotten that this is the combination of fraudulent enterprises that produced a large portion of the fraudulent mortgages that put these people in this position and then doubled down on this fraud by committing another fraud generating documents to foreclose on these mortgages to cover up how they defrauded buyers of mortgage backed securities? These enterprises are currently being run by the same fraudsters that were never investigated and prosecuted because the government doesn’t want the truth to come out but we should believe that the victims of their fraud should jump at the chance to hand over the titles to their homes to these people? What really are the odds that these people would end up paying “market” rents for these properties and that Bank of America would prove to be a reliable, honest landlord?

    Who are the real winners and losers in this scheme? With out a doubt Bank America will come out way ahead but will anyone else? Wouldn’t these newly converted renters likely be able to rent a similar house for less money than Bank America would charge and get a more reasonable lease from a more responsible landlord? Millions of under-water homes are owned by people who would like to move but are locked in to staying where they are because they can’t afford to take the loss & move. Maybe these new renters could help these other homeowners instead of bailing Bank of America and their government accomplices out of their predicament instead. What are the implications of these rent payments to the owners of the mortgages that Bank of America services but doesn’t own (mostly because they “dumped” them on GSE’s like Fannie & Freddie after buying them for 25 cents on the dollar from Countrywide to begin with. Did Bank of America pass along this 75% savings to the GSE’s when we bailed them out?)? How many CDS’s will expire during the 3 year rental period before Bank America starts radically raising the rents and the owners are forced out of their houses anyway, after having voluntarily given up any protections they might have had with courts overseeing foreclosure actions on their homes?

    How about a follow-up video conference with Professor Randall Wray to discuss the implications of this on the securities fraud charges that Attorney General Eric Schneiderman is still pursuing against Bank of America.http://www.huffingtonpost.com/l-randall-wray/merss-smoking-gun-part-1-_b_794713.html ?

    Remember, it wasn’t inevitable that it had to play out this way. Had investigations been seriously undertaken as soon as it was obvious a massive fraud had been committed, it would have been recognized early on that real estate owners and investors were both victims of this massive fraud and the courts could have come up with some reasonable means of allocating the losses among the victims, after having clawed back any “profits” that were generated by the fraudsters. Instead we have the homeowners being thrown out so the banks and investors have the largest possible pie (after attorney fees of course) to divide up in their own settlements and others supporting this as a reasonable outcome. What are the implications for anyone relying on the government to prevent those in power from defrauding any group they choose to? Providing additional ways to cover this up ultimately just digs the hole deeper.

  4. Michael says:

    Ok, but doesn’t this keep “undeserving” homeowners from being thrown out, and doesn’t that mean that Obama will reject it out of hand, as per his personal (conservative) biases against the “undeserving”?

  5. PeonInChief says:

    BofA, and eventually other lending institutions will, are proposing this now for a simple reason. The insurance companies that provided insurance for the sad, sorry mortgages have largely been bankrupted paying out insurance on defaulted mortgages. That means that the lenders actually do lose money on foreclosures, and are looking at something that would limit their losses.