The Obama administration, behind Treasury Secretary Jacob J. Lew, announced last week that it will use its Treasury kitty to fund the construction of inexpensive rental properties and extend its ongoing Making Home Affordable initiative pursuant to helping troubled homeowners forestall, or completely avoid foreclosure.
Reading from prepared remarks, Lew explained the administration’s plan to extend Making Home Affordable for at least one more year. “We need to continue to be there for homeowners who are facing foreclosure, those who are struggling with increasing interest rates on their modified mortgages, and those whose homes are caught underwater,” said Lew at an event that marked the initiative’s anniversary.
He added that the government would use money from the U.S. Treasury’s Federal Financing Bank in an effort to help housing finance agencies create more rental housing opportunities for struggling consumers.
The global economic recession of the late 2000s, which included the crash of the U.S. housing market, resulted in much greater appetite for rental housing, and such high demand has been the primary variable driving prices upwards. Consumers typically rent because they had lost their homes in one way or another, do not have access to mortgage credit, or are currently skittish on buying a new home for one reason or another.
Lew was also quoted as saying that the administration wants to inject more private capital into the housing market, as the space is presently dominated by Fannie Mae and Freddie Mac, both of which are government-controlled mortgage buyers. According to Lew, he has directed his team “to bring investors and securitizers together” so that the government can come up with new ideas on how to further privatize the mortgage space.