Right to Rent: A Simple Solution to the Foreclosure Crisis Presentation to EARN Dean Baker Co-Director Center for Economic and Policy Research September 13, 2011

Benefits of Right to Rent (R2R) 1)Provides housing security to homeowners facing foreclosure 2)Requires no money and little bureaucracy 3)Frees up money from high mortgage payments 4)Provides incentives for modifications.

Basics of Right to Rent 1)Foreclosed homeowners can stay in their home post-foreclosure (e.g. 5 years) paying market rent. 2)R2R can be limited to certain mortgages (e.g ) and house price (below median). 3)The right to rent is part of foreclosure process.

Mechanics of R2R 1)Court officer handling foreclosure offers homeowner option to rent. In non-judicial foreclosure states, offer must be made as part of process. 2)Court appoints an appraiser to determine the market rent. 3)Rent rises in step with inflation– just cause eviction.

Impact of Right to Rent 1)Savings by switching from mortgage on bubble-inflated house price to rent can be more than $1,000 per month. 2)Keeps homes occupied, preventing blight from foreclosure. 3)Gives banks incentive to modify mortgages voluntarily.

Advantages of R2R 1)No bureaucracy, no public money 2)No moral hazard issues, doesn’t give anyone a windfall. 3)May be acceptable to conservatives (Samwick and Lachman)

Resources on R2R CEPR R2R page ( –The Gains From Right to Rent in 2010 ( rent-in-2010) –The Right to Rent Plan ( The Right to Rent Act of 2011 (H.R – Rep. Grijalva) FHFA/Treasury/HUD RFI on real estate owned homes – due Sept. 15 (

Right to Rent: A Simple Solution to the Foreclosure Crisis Presentation to EARN Dean Baker Co-Director Center for Economic and Policy Research September 13, 2011