The problem with this requirement in the current environment is that having banks, servicers, Fannie Mae, Freddie Mac, and the Federal Housing Administration all following the same approach with thousands of properties on the market at the same time may actually be exacerbating the slump in housing prices.
Our research suggests that if lenders were permitted in some cases to rent residential REO property rather than sell it at fire-sale prices, it could better balance rental and owneroccupied markets and thus help housing prices stabilize sooner. Banks would have the opportunity to offset carrying costs and potentially increase their ultimate recovery.