Freddie Mac to let foreclosed homes stay occupied


In a new plan that makes a whole lot of sense, Freddie Mac will allow foreclosed homeowners and tenants to stay in repossessed homes by renting them back.

The program is expected to provide relief from eviction to 8,600 families in 2009. Renters will have to pay market rents -- not necessarily the amount of the mortgage -- and property management firms will be hired to set prices and handle management.

This initiative will help to stop the rash of sudden evictions, although it will be of little help to the most financially-strapped former homeowners: In order to sign the month-to-month lease, you'll have to demonstrate that you have the income to pay the rent.

Who won't be excited about this news? Apartment and rental housing operators. The glut of vacant foreclosures has been helping to artificially prop up demand for rental properties, but allowing people to live in foreclosed homes could have a material impact on landlords in hard-hit areas.