Ideas for foreclosed properties, underwater owners

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Friday, January 20, 2012

What should the federal government do to address the inventory of foreclosed properties?

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More foreclosed properties should be made available for rental opportunities.  It's a risky business that requires the involvement of seasoned professionals, many of which have arisen through the NSP process.  FHA should also develop a Multifamily Rental product that supports the aggregation and successful financing and operation of such properties.

Owners who are "underwater" on their mortgages should be offered an opportunity to convert to a servicing first mortgage that matches the market value of their homes, with a non-servicing second mortgage for the remaining balance that is shared between the lender/investors and the borrower upon sale. Ocwen Financial has pioneered such a "Shared Appreciation Modification" that could serve as a model.

Conrad Egan is Senior Advisor for the Affordable Housing Institute


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