Fed Urges More Banks to Rent Foreclosures
To prevent overall home prices from any further potential drops, the Federal Reserve is urging banks to transform more of its foreclosed homes into rental properties. The Fed made the request to banks in new policy guidelines it released Thursday.
“Banking organizations should make good-faith efforts to dispose of foreclosed properties,” the Fed said.
The Fed has been urging banks to consider more foreclosure rentals for several months. In a policy paper earlier this year to Congress, the Fed argued that if banks turned more of their foreclosed properties into rentals it would not only help alleviate any possible drops in overall home prices but also help meet the market’s growing demand for rental units.
The Fed urged banks to carefully examine the demands of rehabbing properties and leasing them out. They also urged banks to establish policies to ensure standard maintenance codes are met for any foreclosed properties, regardless with what the banks decide to do with the homes.