Reps. Grijalva and Kaptur Introduce Legislation to Allow Homeowners Facing Foreclosure to Remain as Renters
Washington, D.C. – April 16, 2010 – (RealEstateRama) — Rep. Raúl M. Grijalva today introduced a bill with Rep. Marcy Kaptur to create a “Right to Rent” (R2R) for homeowners facing foreclosure. The bill allows a family receiving a foreclosure notice to petition a judge to stay in their home as renters under a 5-year lease. The judge would appoint an independent appraiser to set fair market rental value, which would be allowed to rise with inflation.
The R2R bill was introduced on the heels of the RealtyTrac, Inc., announcement that foreclosure activity rose by 19 percent in March, setting a new monthly record of 367,000 actions. RealtyTrac also found that for the first three months of 2010, foreclosures are up by 60 percent compared to 2009 and roughly 6 million mortgages are at least 60 days delinquent. According to real estate research firm First American CoreLogic, 11.3 million, or 24 percent, of all residential properties with mortgages had negative equity at the end of the fourth quarter of 2009.
Grijalva called the latest statistics “an indication of the profound, historic crisis we face and the need for creative solutions like Right to Rent. I’m proud to work with a champion of workers’ rights like Marcy Kaptur to address this problem, and I call on the rest of Congress to take a hard look at why we’ve allowed things to get this bad.”
Between February and March, the number of people who received assistance through the federal Home Affordable Modification Program (HAMP) and have since been foreclosed on nearly doubled from 1,499 to 2,879.
“HAMP is simply an insufficient response to this crisis,” Grijalva said. “Right to Rent is a fair and sensible solution for struggling homeowners. Banks will still get reliable rental income, and families will be able to stay in their homes and significantly lower their monthly housing costs.”
Grijalva called the terms of the bill “a workable and equitable compromise for lenders, families, and communities. Passing this bill will help neighborhoods avoid the spiral of decay, crime and lower property values that often follows mass vacancies without creating any new bureaucracy or transferring a dime of taxpayer money to homeowners or banks.”
To prevent use of the program by speculators, R2R eligibility would be limited to homes purchased at or below the median price for their metropolitan statistical area, and must have been the family’s principal residence for no less than 2 years. Only mortgages originated before July 1, 2007 will be eligible.
HR 5028 is an updated version of a similar bill Grijalva introduced in the 110th Congress as HR 6116. For more information, read a summary of the bill at Grijalva’s Web site.
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