Freedom Line Blog

While the federal government continues to create moral hazards for people trying to stay in their soon-to-be-foreclosed homes, TwinRock LLC is giving those same people a reason to hope: letting former homeowners rent their foreclosed properties at reduced rates.

So far TwinRock has purchased 22 homes in Moreno Valley, Riverside, Corona, Rialto, San Bernardino, Highland, Murrieta, Wildomar and Temecula, and the company has plans to buy several hundred more, said Meyer.

Earlier this year, TwinRock put together a $6 million fund to enable the company to buy about 40 Inland homes and it is getting ready to raise another $15 million, Philips said. The firm’s investment model primarily calls for buying houses with cash at trustee auctions conducted each weekday at Inland courthouses, he said.

There’s another benefit to keeping people in their homes:

Letting former homeowners remain in the foreclosed homes as tenants also eliminates the potential that the homes will be vandalized by angry former owners facing eviction, Meyer said.

TwinRock’s solution isn’t for everyone.  Some homeowners are so indebted in other areas they need to declare bankruptcy and restart their financial history.  For many others, however, renting one’s home with the possibility of buying it back later is much more attractive than waiting for a temporary government bailout.

H/T: Riverside (CA) Press-Enterprise

Dwight M. Jaffee, professor of finance and real estate at the University of California, Berkeley, points out in The Wall Street Journal that “Today 90% of the $14 trillion in outstanding residential mortgages is controlled by the Federal Housing Administration (FHA), the Department of Veterans Affairs, or Fannie Mae and Freddie Mac – with the latter two under government conservatorship.”

Ninety percent?  Wait a minute…  Doesn’t every dizzy big-government leftist from Barack Obama to Paul Krugman tell us that “deregulation” of the housing sector caused our economic difficulties?  The fact is that the housing finance market is one of the most regulated, not least regulated, sectors of the entire economy.  Thanks to Professor Jaffee, we are reminded of the sheer scale of that regulation, as well as the left’s efforts that fed the housing bubble.