Analysts with the Bank of America Merrill Lynch believe the federal government’s real estate-owned (REO) rental program could encompass 20 percent of the national foreclosure total. The data, found in a story on HousingWire , suggests the program could have the far-reaching impact supporters are hoping for.
Roughly 50 percent of all real estate-owned inventory in the U.S. is located in 20 metropolitan areas, as noted by BofAML. Even if those areas were the only ones included in the program, they would still account for approximately 1.5 million of the 3 million total government-backed mortgages due to liquidate in the next four years. Many of these metro areas will be included in the program’s initial stages, which will offer almost 2,500 properties in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix, and Florida for bid.
According to BofAML, approximately 4.2 million new renters have appeared in the housing market since the end of 2006. Concurrently, 1.2 million homeowners have left the market. Add to that the backlog of 7.5 million foreclosures not currently on the market, and the REO program appears poised to continue for some time.
Opponents of the plan, such as Capital Economics, note that many of the properties for sale are already occupied by tenants, saying that won’t reduce the number of vacant homes or provide additional homes to rent.
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