Fannie Mae Implementing the Deed for Lease Program

[analyst]

[quote=Huckleberry]http://www.fanniemae.com/newsreleases/2009/4844.jhtml?p=Media&s=News+Releases

This program lowers rents to 31% of income, so instantly rents will fall to match incomes, and in doing so drag other rentals down with them.[/quote]

The news release does not say that rents will be lowered to 31% of income. It says that, to qualify, the borrower-become-renter may not pay more than 31% of income to cover the newly established market rental rate.

The unanswered question is how market rental rate will be established for each property.

[(former)FormerSanDiegan]

[quote=scaredycat]all the people in the homes are renters who aren’t renting rentals. so it seems like it has to increase the number of rentals avilable on the market, assuming the people staying in the homes would otherwise have rented rentals and not just lived in their vans or crashed at friends’ houses.[/quote]

I believe that it would result in very nearly ZERO net change in supply and demand of rentals. Here’s why.

Demand side:
If they were foreclosed on, the former owner would be in the market for a new unit. Net result to demand: one new renter.

Supply side :
Once the house is foreclosed and sold it will either be owner occupied or rented out. I’ll address three cases (sold to investor for rental; sold to one who was previously in a rental; sold to move-up buyer)
1. In the case where it is rented out there is an increase of one additional rental unit. Net result to supply: one new rental unit.
2. If it is sold to someone who was previously renting, their previous rental is available. Net result to supply: one new rental unit.
3. If it sold to a move-up buyer, then they have to either sell or rent out their house. If they rent it out the net reult is one additional rental unit. If they sell then either their buyer or their buyer’s buyer (or someone further down the chain of move up buyers) is a previous renter. Net result : one additional rental unit.

[(former)FormerSanDiegan]

[quote=scaredycat]all the people in the homes are renters who aren’t renting rentals. so it seems like it has to increase the number of rentals avilable on the market, assuming the people staying in the homes would otherwise have rented rentals and not just lived in their vans or crashed at friends’ houses.[/quote]

I believe that it would result in very nearly ZERO net change in supply and demand of rentals. Here’s why.

Demand side:
If they were foreclosed on, the former owner would be in the market for a new unit. Net result to demand: one new renter.

Supply side :
Once the house is foreclosed and sold it will either be owner occupied or rented out. I’ll address three cases (sold to investor for rental; sold to one who was previously in a rental; sold to move-up buyer)
1. In the case where it is rented out there is an increase of one additional rental unit. Net result to supply: one new rental unit.
2. If it is sold to someone who was previously renting, their previous rental is available. Net result to supply: one new rental unit.
3. If it sold to a move-up buyer, then they have to either sell or rent out their house. If they rent it out the net reult is one additional rental unit. If they sell then either their buyer or their buyer’s buyer (or someone further down the chain of move up buyers) is a previous renter. Net result : one additional rental unit.

[(former)FormerSanDiegan]

[quote=scaredycat]all the people in the homes are renters who aren’t renting rentals. so it seems like it has to increase the number of rentals avilable on the market, assuming the people staying in the homes would otherwise have rented rentals and not just lived in their vans or crashed at friends’ houses.[/quote]

I believe that it would result in very nearly ZERO net change in supply and demand of rentals. Here’s why.

Demand side:
If they were foreclosed on, the former owner would be in the market for a new unit. Net result to demand: one new renter.

Supply side :
Once the house is foreclosed and sold it will either be owner occupied or rented out. I’ll address three cases (sold to investor for rental; sold to one who was previously in a rental; sold to move-up buyer)
1. In the case where it is rented out there is an increase of one additional rental unit. Net result to supply: one new rental unit.
2. If it is sold to someone who was previously renting, their previous rental is available. Net result to supply: one new rental unit.
3. If it sold to a move-up buyer, then they have to either sell or rent out their house. If they rent it out the net reult is one additional rental unit. If they sell then either their buyer or their buyer’s buyer (or someone further down the chain of move up buyers) is a previous renter. Net result : one additional rental unit.

[(former)FormerSanDiegan]

[quote=scaredycat]all the people in the homes are renters who aren’t renting rentals. so it seems like it has to increase the number of rentals avilable on the market, assuming the people staying in the homes would otherwise have rented rentals and not just lived in their vans or crashed at friends’ houses.[/quote]

I believe that it would result in very nearly ZERO net change in supply and demand of rentals. Here’s why.

Demand side:
If they were foreclosed on, the former owner would be in the market for a new unit. Net result to demand: one new renter.

Supply side :
Once the house is foreclosed and sold it will either be owner occupied or rented out. I’ll address three cases (sold to investor for rental; sold to one who was previously in a rental; sold to move-up buyer)
1. In the case where it is rented out there is an increase of one additional rental unit. Net result to supply: one new rental unit.
2. If it is sold to someone who was previously renting, their previous rental is available. Net result to supply: one new rental unit.
3. If it sold to a move-up buyer, then they have to either sell or rent out their house. If they rent it out the net reult is one additional rental unit. If they sell then either their buyer or their buyer’s buyer (or someone further down the chain of move up buyers) is a previous renter. Net result : one additional rental unit.

[(former)FormerSanDiegan]

[quote=scaredycat]all the people in the homes are renters who aren’t renting rentals. so it seems like it has to increase the number of rentals avilable on the market, assuming the people staying in the homes would otherwise have rented rentals and not just lived in their vans or crashed at friends’ houses.[/quote]

I believe that it would result in very nearly ZERO net change in supply and demand of rentals. Here’s why.

Demand side:
If they were foreclosed on, the former owner would be in the market for a new unit. Net result to demand: one new renter.

Supply side :
Once the house is foreclosed and sold it will either be owner occupied or rented out. I’ll address three cases (sold to investor for rental; sold to one who was previously in a rental; sold to move-up buyer)
1. In the case where it is rented out there is an increase of one additional rental unit. Net result to supply: one new rental unit.
2. If it is sold to someone who was previously renting, their previous rental is available. Net result to supply: one new rental unit.
3. If it sold to a move-up buyer, then they have to either sell or rent out their house. If they rent it out the net reult is one additional rental unit. If they sell then either their buyer or their buyer’s buyer (or someone further down the chain of move up buyers) is a previous renter. Net result : one additional rental unit.

[scaredyclassic]

ok im persuaded. no additional rental units. it’s almost like a form of rent-controlled housing. what if the 31% never adjusts, and there is massive inflation? Then it would truly be an awesome renting deal! will it have an effect on houisng prices? lowers supply, so higher prices? or does it just slow the bleeding?

[scaredyclassic]

ok im persuaded. no additional rental units. it’s almost like a form of rent-controlled housing. what if the 31% never adjusts, and there is massive inflation? Then it would truly be an awesome renting deal! will it have an effect on houisng prices? lowers supply, so higher prices? or does it just slow the bleeding?

[scaredyclassic]

ok im persuaded. no additional rental units. it’s almost like a form of rent-controlled housing. what if the 31% never adjusts, and there is massive inflation? Then it would truly be an awesome renting deal! will it have an effect on houisng prices? lowers supply, so higher prices? or does it just slow the bleeding?

[scaredyclassic]

ok im persuaded. no additional rental units. it’s almost like a form of rent-controlled housing. what if the 31% never adjusts, and there is massive inflation? Then it would truly be an awesome renting deal! will it have an effect on houisng prices? lowers supply, so higher prices? or does it just slow the bleeding?

[scaredyclassic]

ok im persuaded. no additional rental units. it’s almost like a form of rent-controlled housing. what if the 31% never adjusts, and there is massive inflation? Then it would truly be an awesome renting deal! will it have an effect on houisng prices? lowers supply, so higher prices? or does it just slow the bleeding?

[waiting hawk]

No one mentioned the maintenance? Under certain laws the guberment cannot be a slum lord so go ahead and let your property go back to them and call them to fix your dishwasher, ac, and leaky roof. lmao this is a sweet deal for home debtors if you ask me.

[waiting hawk]

No one mentioned the maintenance? Under certain laws the guberment cannot be a slum lord so go ahead and let your property go back to them and call them to fix your dishwasher, ac, and leaky roof. lmao this is a sweet deal for home debtors if you ask me.

[waiting hawk]

No one mentioned the maintenance? Under certain laws the guberment cannot be a slum lord so go ahead and let your property go back to them and call them to fix your dishwasher, ac, and leaky roof. lmao this is a sweet deal for home debtors if you ask me.

[waiting hawk]

No one mentioned the maintenance? Under certain laws the guberment cannot be a slum lord so go ahead and let your property go back to them and call them to fix your dishwasher, ac, and leaky roof. lmao this is a sweet deal for home debtors if you ask me.

[Author]

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