Own to Rent?: A Proposal to Ease the Mortgage Crisis

March 13, 2008

Dean Baker has posted a piece in the The Economists Voice on a different approach to addressing the sub-prime mortgage crisis.  Baker proposes a “rent to own” program where certain homeowners at risk of foreclosure would shift from owners to renters.  In this program some sub-prime borrowers could stay in their homes, but lenders would assume ownership of the property.  The borrower-turned-renter would pay fair market rent to the mortgage holder.  Baker states the plan could help protect millions of homeowners facing the prospect of losing their home.  These homeowners could stay in their home so long as they could afford to pay the rent. Tamar Frankel, the securitization guru, mentioned a similar proposal to me recently.  I found it intriguing, and Baker’s piece is the first I have seen that outlines how such a proposal might work. 


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