A plan that first surfaced a couple of
years ago, aimed at allowing foreclosed homeowners to remain in their
homes as renters, is gaining greater attention today. "The basic point
is you're recognizing an unusual situation so you're temporarily
changing the rules on foreclosure," says co-director of the Center for
Economic and Policy Research, Dean Baker, who first proposed the plan.

He
says foreclosures are rising and nothing else appears to be working.
"As it stands now, if I hold the mortgage on a house and the person
hasn't met the payments, I go to the judge and say 'Look this person
hasn't met the payments.' The homeowner is given a certain number of
days and, if payments aren't met by then, the house is mine. I throw
[the homeowner] out on the street," says Baker.

Baker's plan proposes to change the rules of foreclosure for a limited period of time.

"Mortgages
issued 2002 to 2006 or 2007, whatever time period we want to put in
there. For those mortgages we're going to recognize the unusual
situation and say that if I want to foreclose on that person, I have to
give [the homeowner] the option to stay there as a renter," explains
Baker.

The length of the rental period would be determined by
Congress if the proposed bill passes. "My view is you want it to be as
long as possible -- seven years or 10 years -- a lot of people wouldn't
take advantage of that whole time but the point is to give people
substantial security in their home so they can stay there for a period
of time as renters, paying the market rent. They're not getting a
subsidized rent," says Baker.

The plan also binds buyers of the
foreclosed property to commit to allowing the former homeowner to
remain as a tenant for the rest of the guaranteed period. According to
Baker, the important thing to note is the many benefits that this plan
can bring for neighborhoods and property owners in those areas as well
as those facing foreclosure.

"The absolute worst thing you
could have happen for a neighborhood is to have vacant properties and,
of course, in a lot of these areas you have a lot of vacant properties.
Banks often don't care for them well. They don't see to it that the
grass is mowed, that broken windows are fixed or boarded up. Sometimes
houses become crack houses or there are squatters there. So it's the
worst thing in the world to have a foreclosure and have a house sit
vacant and in many places that's exactly what's happening," says Baker.

But Baker says that this plan may actually keep people in their
homes and also let them remain homeowners. "I think a lot of banks will
suddenly get serious about modifying loans if the alternative is being
a landlord for five years. So, I think it will keep more people in
their homes as owners but certainly it's also better to have a
neighborhood that has renters in those houses than have them staying
vacant." However, Baker says banks still may feel the loss. "There is a
neighborhood effect that if you prevent foreclosures and keep homes
occupied, [the banks] may actually benefit. But in any specific home,
if [the banks] kept everyone else from foreclosing but they themselves
got the right to foreclose, they'd probably be better off foreclosing
and throwing the person out. So the banks weren't happy about [the
proposed plan]," says Baker.

And the public? Well, these
matters can be very touchy. "When you talk about the bailout programs,
the modifications that involve public money, it really breeds a lot of
resentment," says Baker.

Baker says, "You have someone saying,
'Well, I've been paying my mortgage why should I subsidize this person
who's not?'" However, he says that's not the case with the right to
rent plan. Baker says that non-delinquent homeowners should understand
that taxes aren't being raised to support the plan.

"The
biggest selling point is that it doesn't require any bureaucracy, just
that you change the rules and you've instantly empowered millions of
homeowners who otherwise could just be foreclosed with no recourse. Now
they have something that they can hang on to," says Baker.