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70 I N D U S T R Y I N S I G H T / J O N B U E R K E R T Delinquencies and foreclosures may have dropped to pre-crisis levels, but the mortgage debacle is far from over. Many mortgage lenders and servicers continue to sit on large numbers of real estate owned (REO) and foreclosed properties. Making matters worse, many of these homes are barely in marketable condition due to deferred maintenance and no updating, and they're a blight on their surrounding community, dragging down neighboring property values and reducing property tax revenues. Yet a ready market may exist for some of these homes. ere are plenty of people who would be willing to take over the responsibility of rehabbing the properties and getting them back on their feet again, even as they're living in them. ere's just one problem: they don't have the money to buy the homes, mainly because their previous credit problems prevent them from securing a mortgage. is state of affairs is especially frustrating for those people who lost their homes after the real estate market crash but have been able to rebuild their finances since then. ey could save a lot of money each month by owning rather than renting, but they can't afford to buy. Meanwhile, the homeownership rate sits at a nearly 48-year low of 63.5 percent. Fortunately, an answer exists to solve both of these problems: rent-to-own housing. RENTING TO OWN Rent-to-own housing gives underserved consumers a path to homeownership that they might not otherwise have, while providing immediate occupancy of homes by people who are willing and able to fix them up. Rent-to-own companies offer the occupant the opportunity to get the home back to where it is a functioning property again, one that's contributing to the neighborhood and raising local home values. In the process, residents have a place to live and learn what it means to be a homeowner, such as making the necessary home repairs and maintenance, making timely payments, and improving their credit. For lenders, rent-to-own companies offer a good outlet for their REO properties while creating a list of prospective future mortgage customers—people who have developed a track record of making timely lease payments while demonstrating their ability to handle the other responsibilities of owning a home, namely Rent-to-own arrangements offer a way to restore vacant properties while also giving habitual renters a shot at homeownership TRANSFORMING THE TENANT