1) it is easy to write “the market rent” and pronounce the problem solved. But empirically, the determination of “market rent” has been a bureaucratic nightmare. Rent control boards are disasters. What is “the market”? In most of these neighborhoods there are no rentals going on and certainly not enough to call it a market. What is the market rent in out years, given that the rental market becomes affected by this program. Do you do it house by house and do differences in condition matter? How do you do it, period? Does it involve legal processes? Lawyers? While they’re battling about the “market rent”, what happens – how much gets paid? Do you leave eviction rules in effect for nonpayment – how many bites at the apple does someone get, given that this would be itself a debt relief method? Does this become a federal program – do federal rules preempt state eviction rules or become subordinate to them? Are you creating a set of federal landlord-tenant courts? How popular will that be? What are the costs of all this?
2) Ten years? You’ve got to be kidding. That only proves point 1. You’re setting up a permanent nationwide rent control bureaucracy and an ancillary network of lawyers and so forth who make a living off of the program.

Far more efficient to just mail out some checks and see if it helps tide people over.

I don’t think most people even understand what a principal cramdown is, on a basic level. That’s it’s part of bankruptcy, not a free giveaway; that judges have had the power before, with no ill effects; and that it’s permitted on virtually ANY OTHER LIEN, with a special exemption for residential mortgages that was granted to the banking industry because it pleaded before Congress that it was trying to “help people buy homes.”

Cramdowns are no gift to homeowners. It’s a bankruptcy proceeding, so their credit is shot one way or another, and their repayment is strictly supervised and not conducive to a festive lifestyle. What cramdowns really offer is a way to deleverage that’s fair to all creditors, by letting the bank pretend that its loan is still secured by collateral that really isn’t worth anything near what the note says. The bank elbows its way to the head of the line, on a lie.

You know what I really think is behind these rent-to-own proposals? Foreclosures are just now reaching the affluent neighborhoods occupied by the people who propose them.

These arguments about deadbeat renters are really hollow, by the way. Give it up. You don’t pay rent you get evicted. There’s no magic here. If people can’t pay the rent they won’t be long in the house.

Market rents, however, are about 2000 – 2400, which is why people rarely rent their houses.

So what rent do you charge the person living in the house and if you charge them market, are you forcing the lender (new owner) to rent below carrying costs for such a long period of time?

Now, I understand that the lender (new owner) doesn’t have the mortgage carrying costs, but the buyer (if the buyer were forced to keep the arrangement with the renter) would.

This would seem to lock the lender (new owner) into subsidizing the property for whatever period you design. Then it’s a cash flow problem. The rent would barely cover taxes, and little left for maintenance. It might be a slower drain on neighborhoods, but a drain none-the-less.