[FailiaFelay]

Fed helping to eliminate private home ownership... (American families should pay rent)

The Federal Reserve recently came out with an unprecedented analysis directed to the Committee on Financial Services regarding various methods to improving the housing market....

One of the big recommendations centers on creating a “REO to rental” program by facilitating bulk sales to large investors. Ironically the Federal Reserve by bailing out select banks has allowed home values to remain inflated thus causing this backup in inventory to emerge in the first place....

One of the options presented includes “REO holders to rent” properties out directly. But as we have seen with the massive shadow inventory, banks don’t seem keen on doing this. In fact, it would appear banks would rather wait and see if a nice bailout is coming their way and simply ignore non-payment on homes or taking action on existing inventory....

Another underwhelming option presented in the paper is subsidizing loans to bulk REO buyers. In subsidizing, they mean the taxpayer is going to help fund these deep pocket investors to do something the market will do anyways. The reasons prices are still too high in some markets is because first, the system allowed banks to suspend mark-to-market and allowed these banks to use accounting chicanery....

Almost a century of housing programs in the US and there is a reason that we do not have a REO bulk sale program. Yet here we go again with the Fed subsidizing big players to keep prices inflated....

The premise is wrong and subsidizing here makes winners only out of key investors and banks at the expense of the public....

Instead of focusing on these key topics, the Fed once again looks at subsidizing banks instead of correcting the errors of what led us into this mess....

http://www.doctorhousingbubble.com/r...-reo-business/