An own-to-rent solution for housing
Dean Baker, one of the experts I interviewed for today’s column on the subprime mortgage situation, thinks he has hit upon a way to help struggling homeowners without bailing out lenders. He calls it his Subprime Borrower Protection Plan. Here’s how he describes the key feature of the plan:
This proposal ensures that subprime borrowers will not be thrown out of their home because they cannot meet the terms of a predatory mortgage. The plan … Gives homeowners facing foreclosure the option of renting their home for as long as they want at the fair market rate. This rate is determined by an independent appraiser in the same way that an appraiser determines the market value of a home when a bank issues a mortgage.
To make the plan work, Congress would have to pass a federal law to override the state laws that now govern foreclosures. No new bureaucracy would be required; Baker says the same judges who oversee foreclosures now could enforce the right to rent.
If Congress wants to focus the aid on poor people, it could set a price cap that would prevent McMansion owners from getting relief. The plan doesn’t bail out lenders — who probably won’t relish the prospect of becoming long-term landlords — and it doesn’t give homeowners a windfall either. They would still lose ownership of the house. But the plan would help stabilize poor neighborhoods, where property values often suffer when large numbers of homes go into foreclosure.
Baker is co-director of the Center for Economic and Policy Research, a liberal-leaning think tank. But his idea has also won praise from economists at traditionally conservative institutions like the American Enterprise Institute.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
That idea has a lot of merit. I am glad that this is being publicized by this paper. I hope that the well-fed, Country-club types in Republican-front groups, like the Show-Me Institute, will chime in and let us know where they “weigh in” on this vital issue!