LEASEBACK FORECLOSED HOME?: Neighborhood Preservation Act

by Nelson J Velardo

Neighborhood Preservation Act’.

This is a great bill that would allow foreclosed homeowners to lease their properties back from the bank after a foreclosure sale. The homeowner could lease the property for up to 5 years, plenty of time to win litigation and get the bank kicked our of your property once and for all.

This bill passed unanimously in the House on August of 2009 and has been hung up in the Senate since then. Call your senator and tell them to get off their pathetic asses and finally do something FOR THE PEOPLE!

To amend the Federal Deposit Insurance Act to authorize depository institutions and depository institution holding companies to lease foreclosed property held by such institutions and companies for up to 5 years, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Neighborhood Preservation Act’.

SEC. 2. FINDINGS.

The Congress finds as follows:

(1) Depository institutions and affiliates of depository institutions currently may control and lease foreclosed property for a limited period of time often subject to safety and soundness considerations, under various Federal laws and the law of some States.

(2) Authorizing such institutions and affiliates to enter into a long-term lease with the occupant of the property or any other person would reduce the number of residential properties entering into the housing inventory, which in turn would help to stabilize home values and restore confidence in the housing markets.

(3) Allowing depository institutions and affiliates of such institutions to lease foreclosed property will allow the institution or affiliate to dispose of such property into a presumably more stable market at the end of the lease term which would reduce the loss the institution or affiliate may otherwise be required to recognize upon disposition of the property.

(4) Providing a means for foreclosed property to remain occupied during the housing downturn will preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.

(5) Allowing depository institutions to lease foreclosed property gives families the opportunity to remain in the home, causing less disruption to families, until they have the means to become a homeowner again.

SEC. 3. BANK LEASING OF FORECLOSED PROPERTIES.

(a) In General- Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end the following new subsection:

`(y) Leasing of Foreclosed Property-

`(1) LEASING AUTHORIZED- Notwithstanding any provision of Federal or State law restricting the time during which a depository institution, or any affiliate of a depository institution, may hold or lease property, or any provision of Federal or State law prohibiting a depository institution, or any affiliate of a depository institution, from leasing property and subject to this subsection and regulations prescribed under this subsection, any depository institution, and any affiliate of a depository institution, may lease to any individual, including a lease with an option to purchase, for not to exceed 5 years an interest in residential property which–

`(A) was or is security for an extension of credit by such depository institution or affiliate; and

`(B) came under the ownership or control of the depository institution or affiliate through foreclosure, or a deed in lieu of foreclosure, on the extension of credit.

`(2) SAFETY AND SOUNDNESS REGULATIONS- The Federal banking agencies shall jointly prescribe regulations which–

`(A) establish criteria and minimum requirements for the leasing activity of any depository institution or affiliate of a depository institution, including minimum capital requirements, that the agency determines to be appropriate for the preservation of the safety and soundness of the institution or affiliate;

`(B) establish requirements or exceptions that the agency determines are appropriate under this subsection for any such institution or affiliate for any other purpose; and

`(C) provide for appropriate actions under section 38 with respect to any such lease if necessary to protect the capital or safety and soundness of the institution or affiliate or any other necessary enforcement action.

`(3) LENGTH OF LEASE- If any provision of any Federal or State law, including the Bank Holding Company Act of 1956, governing the permissible activities of depository institutions or affiliates of depository institutions permits a depository institution or any such affiliate to hold property as described in paragraph (1) for a period longer than 5 years, any lease under paragraph (1) may be extended to the extent permitted by such provision of law.

`(4) SUNSET- This section shall apply only with respect to leases entered into during the 2-year period beginning on the date of the enactment of the Neighborhood Preservation Act.’.

(b) Intent of the Congress- It is the intent of the Congress that–

(1) no permanent change in policy on leasing foreclosed property is being established with respect to depository institutions and depository institution holding companies; and

(2) subsection (y) of section 18 of the Federal Deposit Insurance Act should not apply to leases entered into after the sunset date contained in such subsection.

Passed the House of Representatives July 29, 2009.

Attest:

Clerk.

111th CONGRESS

1st Session

H. R. 2529

AN ACT

To amend the Federal Deposit Insurance Act to authorize depository institutions and depository institution holding companies to lease foreclosed property held by such institutions and companies for up to 5 years, and for other purposes

22 Responses

  1. Desperate measures for finding a band-aid solution to a nationwide problem. This solution may work for a very small percentage. Instead We Buy Houses type real estate investors would be better served acquiring the properties to rehab and rent out to revitalize the neighborhoods.

  2. Good article. I added your rss adress. Thank you.

  3. Anything they’re throwing at us at this point is nothing but a sign of desperation from the PRETENDERS, they are trying to do whatever it takes to look AS IF they are the actual owners of a home that they’re NOT.
    All of them are so full of sh**t!!!!!, every move is made with a calculating intent behind, these thieves MUST go to jail.

  4. The problem in my situation is the neighborhood left long before I was forclosed, (home stolen), on. After the sheriff’s sale the “Investor” filed a claim on the undisclosed LPMI that was taken out on my property! When the banksters get rid of the homeowner they can get rid of the evidence of fraud. They didn’t go to the extremes they took to steal your home so it is very doubtful they would lease it back to you.

  5. I hate this idea. They screw you how many ways , please , We must never let it never happen again is the answer , our forefathers worked far too hard and gave up far too much, they endured world wars in the name of everything we believed in. The house is not all thst matters nor homeownership it ended up owning us! I simply don’t trust anymore

  6. These banks are desperately trying anything to cover up their crimes.

    Although this could work for a few of us to use as Neil interestingly lays out for us, (continued possession with a return of all ‘rent’ payments at the end at successful quiet title)….

    …let’s also demand state securitized bank foreclosure moratoriums, by our governor’s (or perhaps attorney general’s) executive order..

    NOW.

    Thank Neil for the interesting thought, and the posters here for all these other ideas.

    I am thoroughly fed up with the banking-government cover ups… that is what we all, are really fighting day by day.

  7. I would rather live out of a rented garage than lease back my own home from the banks. Let the dang house fall to disrepair. Let my home become a liability to them instead of the asset they think they are stealing from me. This is not for me. I’d rather see housing sink further until they homes they stole are worth squat. The banks can pay for the repairs from vandalism, property taxes, insurance, and lawn care. I will not help them to maintain the property they stole. We just don’t have any guarantees that 5 years from now anything will have changed and that the courts will rule in our favor. At this rate, we won’t have the resources to fight them in court, not even in 5 years.

    I could see how this would be beneficial to some families who don’t have any other options. As long as the families are not made to sign any waivers preventing them from future litigation against the banks and are not somehow further damaged by leasing back from the very perpetrators of all this.

  8. Carrie,

    I was exploring that approach this past week. I do see many benefits and agree that modification is an unsound goal.

    I wondered if the homeowners actually needed to move and switch homes. I wondered how kind the rental amount could be before it might be viewed as some type of fraud.

    I wondered if a family member living in the home but not on the mortgage could sign the lease.

    I wondered how many people who are in need of housing might prefer to rent homes for the same amount or less than apartment rentals.

  9. Do you need any more proof that our representatives are criminals? Each of us must help every one of those homeowners file a QT action to get their home back.
    After that, we can help these legislators stand up against the wall where they can explain their actions. It won’t matter, because there has already been a summary judgement for foreclosure and their case is closed.
    If you need any more proof that your country is gone, you are asleep.

  10. usjustice4all,
    “Government be damned but what and who is going to do something about it Dying Truth?”

    We all can if band together to abolish the current government and status quo instead of relying on Obama’s signature “Hope” that the government will do its job if you choose from what they tell you are your options and wait around every 4 or 6 years for another circus election when an official goes bad and “Hope” it doesn’t happen again. It only took fifty-six men approved of by, committed and dedicated to their fellow Americans to sign the Declaration of Independence and free us from the stranglehold that Great Britain had on us. It is way past the point of being a duty of every American to organize together and work towards removing the self-destructive governments from power. Look at AZ, selling its own capital and courthouse to investors and then leasing it back (am I the only one who sees that investors are the real problem, after all ultimately it’s their decision whether or not to foreclose and they profit in the end while the homeowner is left with nothing). We are being forced into slavery and the people in government are allowing it to happen for their own selfish benefits.

    If we allow things to continue the way they are we will never be free again and will forever be exploited. Use your heads, look at the big picture. Can’t you see where this is going? Soon we will all be the property of foreign countries unless we all stand up and do something NOW.

  11. A complete moratorium on foreclosures permanently–give the homes back to the homeowners. The houses have already been paid for. Let the mega banks go to hell. The banks have already shot themselves in the foot. Tens of thousands of houses sit empty. They have to have insurance, maintenance, etc. The banks have already stopped maintaining them, because it costs money. People need to live in their homes. Flipping of the houses by the banks is not going that well. They keep foreclosing, and the inventory of houses that cannot be sold goes up. On top of all of that, most of the houses have clouded titles, and investors are afraid to buy them. It has come full circle. Stop the foreclosures and let the homeowner stay in their home. http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  12. …..“Someone is getting really SCARED, if they want to LEASE BACK a Securitized Mortage to a Foreclosed upon Real property owner!
    Honestly, this is fodder for a Comedy Club!
    Think about it!”
    Gary

    I concur! This entire “plan” is perverse!! I wonder about some of the responses to it. Has anyone considered the twisted logic employed here?

    Are you seriously wondering about tax deductions while LEASING YOUR OWN PROPERTY?

    Paying the thugs who stole it from you to “allow” you to live there? What?????

    Oh! and they’re also cooperating in this with the full knowledge that you will be
    mounting a suit to reverse their theft……?

    This is like a scene from the film “Brazil”……Or a play by Kafka…..

    And, do you seriously consider it likely that the thieves who have hijacked every possibiity of a secure home and life for millions of people are now going to “allow” you to “pay them” whilst you sue them? Huh?

    Here’s a suggestion; review the “acts”, the “bills”, all of the PLANS proposed by this and the former administration/congress. The” Hope for …..whatever act”; the “Making Homes Affordable….”, has anyone reflected on the odd fact that all or most of their “acts”, “plans”, laws have titles that reflect the opposite of what they are……? It might be a scene from Dickens but, due to the total lack of wit in the miscreants who are continuing this pantomime, it resembles Disney more than Dickens.

    IT’S A POISON APPLE FOLKS! And the core of it is a title that is non-negotiable. So, whilst you’re doing your “happy dance” that you’re being ALLOWED to pay the banks a version of “protection” a la the mob, they’ve managed to pacify you whilst they steamroll another “plan” thru Congress. One that will abso-effing-lutely prevent you from suing, from regaining ownership, whatever.

    This a plan worthy of “The Blue Meanies” from Yellow Submarine.

  13. Has anyone seen this:

    http://forceyourlendertomodify.com/

    Here borrowers with comparable homes in foreclosure exchange long-term leases at below-market rent. Then they rely on the tenant-protection law to stay in the homes and allow more time for modification. The theory is if a foreclosed home is leased at low rent, then investors are less likely to buy the home at sheriff’s sale. Some of the comments suggested that the borrower should show up at sheriff’s sale and disclose the lease to the bidders. And of course, they disclose the lease to the bankster before sale. This is an interesting concept to me, except for the modification, which the bank has no more right to do than to foreclose. But at least, it might muddy the waters a bit and give more time for litigation. If this could catch on across the nation, this would definitely cause a moratorium.

    I thought it was interesting that the paperwork and the exchange is FREE, but does offer the option of limited attorney help starting at $99. (I am in no way affiliated with this Web site or anyone related to it.)

  14. Barbara Mikulski
    (202) 224-4654
    Ben Cardin
    (202) 224-4524

    Bank friendly Senators for life in Maryland, call the kids on the hill anyway and let them know.

  15. I find it odd that the banks would be willing to lease back to homeowners who defaulted on their supposed mortgages in the first place just so the neighborhoods don’t go to hell in a handbasket. Ask any city code enforcement official working blighted areas of Cleveland, Phoenix or any number of other hard-hit cities about property neglect. This is no solution … it’s a joke. It’s also a waste of taxpayer money, paying this Congress to pass stupid legislation to give banks the right to do anything when we haven’t even investigated the first set of frauds or audited the Fed. That needs to happen first, then we can make amends.

  16. I like most of your answers. The deal here I believe is to get the people to sign up to lease the properties and then sell the properties anyway to investors. Then the homeowner has to deal with that investor on the price he will have to pay for a house he already owns.

    Another way for the government and the lenders to get rid of their properties and now it may be that the investors will end up owning these properties. Even though it is a securitized property, I thought the foreclosure was going to be held anyway so it would no longer be a securitized property and the lender would be free of the investor that purchased the securities in the first place under the psa.

    Investors can probably buy these properties for 40cents on the dollar and guess what, they will already have the income stream built to satisfy their debt service. Wow!! what a deal for the you guess it, anybody but the homeowner.

    I agree with Dying Truth and Unjustice to some extent.

    Do we keep getting slapped around or what? I do agree that people need to stay in their homes though, at least for the sake of the children. A little something our Congress and the banksters have deserted but have had no media attention for doing.

    Like I said, it is a start, but if they do end up selling the leased properties to investors, the investor has to agree to a sales price before the homeowner pays the investor’s debt service for 5 years.

    I can’t say for sure that is the plan, but it does wreak of a side deal and money in someone else’s pockets besides the homeowner. It always looks like they are trying to do something for the homeowner, but it doesn’t come out that way.

  17. It is certainly a start and if it has already passed the House, then what is the beef from the Senate so we can know the pros and cons?

  18. I’m sorry but this goes beyond STUPID…..

    1. Modifications keep us in the same securitized loans, bound to fail again at a later time.

    2. HAMP is the bigest “joke” since the ‘bearded lady’ was introduced in the CIRCUS…..and,

    3. Someone is getting really SCARED, if they want to LEASE BACK a Securitized Mortage to a Foreclosed upon Real property owner!

    Honestly, this is fodder for a Comedy Club!

    Think about it!

    Gary

  19. There is no one answer that will make anyone happy but I believe to save the people first, this would be a good option if were set right. Just like they took HaAMP $ and used it to send letters Fed Express multiple times but then deny you and start the foreclosure, however this could be like forcing their hands to take what they can from current owners, we can unpack our children’s photo’s and they will not get the insurance $ no matter what. They were not wearing seat belts as required by law so they can not be completely covered for that. Most people pay something for the roof over their head, that should be our compromise, by zeroing out everything we cut our own throats at this point. They can’t waste time blaming mother nature (greed) just as they should not in any disaster. This should be declared a national disaster and relief goes to non profit organizations to GIVE the needed commodity. I am sick of them acting like they know anything about economics. Just like we can’t send our work to other countries, well guess what, they come here for it instead. Government be damned but what and who is going to do something about it Dying Truth? Require knolege of finance and Economics to the idiots that run the show and then add the people that live with it. Then we can vote. We the people are WAY TOO QUITE…in the public.

  20. This is another STUPID idea. Every mortgage in the country was paid off with bailouts. They took the money, that’s an accord and satisfaction. Stop letting these ‘deadbeat investors’ enslave all of us and make us tenents to our own homeland.

  21. I believe this is only good if it is a lease to own. The Banks would not be getting into real estate rentals, per say, but lending on a longer term with more of a security for sticking it out. And it would have to go as market value to the current owner. If that could be done, which I think it could, it should not take long and the economy will be more in the realistic phase that it should be

  22. Interesting idea. It also forces the banksters to assess an honest value on the house which should mean a lower monthly payment for the homeowner.

    Is it still an income tax deduction?

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