The solution itself isn't new, but it's implementation would be: New York Senator Chuck Schumer has just endorsed a plan to allow homeowners in danger of foreclosure to keep renting their home at market rates even if they can't afford their mortgage loan payments, sometimes called rent in lieu of deed. Our own Dean Baker, who is also the director of the Center for Economic and Policy Research, describes the policy in an op-ed:Congress can pass legislation granting current homeowners the right to stay in their homes as long as they like, simply by paying the fair-market rent. In other words, no one gets tossed out on the street, as long as they can pay the rental value of their house. The fair rent would be determined by an independent appraiser — exactly the same way that a lender is supposed to determine the size of a mortgage that can be issued on a home.This would be a logical next step if the administration can't get the Making Home Affordable plan to start making homes affordable. That an influential and politically savvy senator is interested in this policy is a good sign that there may be some more outside pressure on the administration to take aggressive steps on the foreclosure problem. As foreclosure rates continue to rise, the window of time for effective action on this front is rapidly closing. And we won't have an economic recovery until the housing markets are stabilized. h/t Felix Salmon.
-- Tim Fernholz
