THE FRONT COUNTER

The SF Chronicle presents an interesting story today about bank negotiated leases with homeowners before they foreclose on their property.  In return for rent, the policy keeps them in their home, keeps vacancy rates down and in general, is a pretty humane and smart approach to the current housing crisis.

Homeowners don’t see their credit score hit quite as hard (not sure that’s too critical though - remember that many of these foreclosed owners had iffy credit and income that wasn’t checked by loan officers in the first place) and more importantly, cities don’t have rows of homes that are vacant and/or blighted.

Currently the proposal is for a market rate lease for one year, though some housing advocates would like to see the Sallie Mae program extend to 3-5 years with an option to buy back the home.  As the article points out, that’s a long time for banks to carry the “toxic” loan.

The official action is modest, a $2.5 million contract to devise a set of detailed growth scenarios for California, from classic suburban sprawl to compact development focused on older cities. The goal is to produce a single “preferred scenario” - one that conceivably could be used to prod local governments to accept or reject new construction.

Something like this only makes sense in rainy locations but still, pretty neat.