Good Medicine for the Foreclosure Virus. Federal Reserve Suggests, "Rent to Own"
Federal Reserve Chairman Ben Bernanke is acting like the cheerleader in chief for pushing banks to consider the rental or rent to own home purchase options versus the way of the foreclosure.
He shared his views in a speech this month to the National Association of Homebuilders, proposing some ways in which the market can overcome the foreclosure crisis.
Bernanke and the Fed stated in a comprehensive state of the housing market report in January that "Rent-to-own provisions, which would give existing tenants the option to purchase their properties during their tenancies, might facilitate the transition of some renters back to the owner-occupied market."
Banks currently own a whopping $11 billion in housing stock, commonly referred to as real estate owned, or REOs. Rather than wither on the market, Bernanke asserts, banks should find ways to get renters or rent-to-owners into them.
Will banks heed Bernanke suggestion? Hard to say, but it seems Main Street is acting faster than Wall Street, as the rent-to-own housing model gains traction.