Feds eye foreclosed homes for rentals

The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.

The Federal Housing Finance Agency said yesterday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration.

The U.S. government rescued Fannie and Freddie in September 2008 and has funded them since the financial crisis. They own or guarantee about half of the nation's mortgages and nearly all new mortgages.

At the end of July, the government owned roughly 248,000 foreclosed homes, officials said. About 70,000 of those are listed for sale. But officials expect the number of foreclosures to soar in the coming months.

Converting the homes into rentals may reduce "credit losses and help stabilize neighborhoods and home values," said Edward DeMarco, acting director of the Federal Housing Finance Agency. Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices of nearby homes.

It also might meet the growing demand for rentals. Since the housing meltdown, nearly 3 million households have become renters, according to census data.