New federal housing plan could stabilize the housing market

Consolidated Credit Counseling Services says the new bill proposed by the House Financial Services Committee could provide homeowners facing foreclosures with assistance, while helping to stabilize the housing market. The legislation entitled The Neighborhood Preservation Act of 2011 could enable FDIC-member banks along with Fannie Mae and Freddie Mac to rent real estate owned properties back to borrowers who defaulted on their homes or other renters.

CPA of Consolidated Counseling Services, Howard Dvorkin, said renting foreclosed homes would help properties maintain their value until the housing prices recover, while eliminating the distressed properties that are clogging the market and driving prices down. According to Consolidated Credit, the bill would allow former homeowners to rent the home they failed to pay their mortgage on, while home values would stabilize with less foreclosed properties on the market.

Joseph Cvelbar, director of Consolidated Credit's housing counseling division, said, "It is considerably better to have families renting homes and keeping children in existing schools than have a squatter take over the property or have the house vacant, which can become a safety hazard."

But this effort may not be enough to boost consumer confidence. A recent Rasmussen Report found only 37 percent of American adults remain somewhat confidence in the U.S. banking system. The report showed 59 percent lack confidence in the system, of which 18 percent are not at all confident.  

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