Rent 'Em Out! How Long Must I Wait?

Hoaw about we rent 'em out?
Source: Reuters. As a glut of foreclosures on the market weighs down home values across the country, a bipartisan bill introduced in the House proposes a solution to reducing the high inventories: Rent the properties out. The proposed bill, Neighborhood Preservation Act of 2011, calls on banks and the government-sponsored enterprises--Fannie Mae and Freddie Mac--to start renting out some of their foreclosed properties to reduce REO sales and “stabilize home values and restore confidence in the housing markets.” The bill would authorize federally-chartered institutions to enter into a long-term lease -- for up to five years -- with the occupant of the property or with another person, and then at the end of the agreement provide an option to buy the home to the tenant. According to the bill, this would allow the foreclosed property to remain occupied during the still-sluggish housing market and “preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.” Not sure if the real estate community will buy into this but if the long-view is considered, anything that helps stablize values may not be a bad idea.
See the Press Release: http://miller.house.gov/UploadedFiles/07-28-11_Press_Release_-_Rep._Miller_Statement_on_Neighborhood_Preservation_Act_of_2011.pdf 

After a negatvie credit event, how long will it take before one can get a new home loan?
A sluggish housing market has caused millions of home owners to lose their home to foreclosure, short sale, or deed in lieu of foreclosure. But once these former home owners get a better handle on their credit, how long do they have to sit on the sidelines until they can secure future financing to buy a home again? As an article in The New York Times notes “there are plenty of asterisks and conditions” when it comes to how long a borrower must wait after a “significant derogatory event,” like a foreclosure or short sale. In general, however, The New York Times notes that the longest wait to buy again will come if there is a foreclosure in the former home owner’s past. Fannie Mae and Freddie Mac have a three-year waiting period following a foreclosure, and a two-year wait following a short sale, deed in lieu, or discharge or dismissal of bankruptcy. However, if borrowers can justify that the circumstance for the foreclosure or bankruptcy occurred because of an illness or job loss — or other “extenuating circumstance” — that may help reduce their wait. But with no such extenuating circumstances, these former home owners may have to wait longer, even up to seven years following a foreclosure or four years after bankruptcy, the article notes. For loans insured by the Federal Housing Administration, borrowers with perfect credit afterwards also will, in general, have to wait three years after a foreclosure and two years after a bankruptcy is discharged, The New York Times notes. Following a short sale, borrowers will have to wait three years to secure another FHA loan — however, there are plenty of exceptions. Borrowers will have to wait three years if they were in default at the time of the short sale and had no extenuating circumstances. However, if the borrowers were on time with all their payments a year prior to the short sale, they may have no wait at all and might even qualify for an FHA loan immediately."

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