Just yesterday, JMO Reader Dave Keller and I were having a conversation regarding logical steps to deal with the Foreclosure Crisis. I suggested that the banks complete the foreclosure process so we can find the "true bottom", but allow occupants to continue to live in the home and pay market rent. I believe that this would allow banks to take the write-down, while keeping a revenue stream alive. This would also encourage qualified homeowners to pay for their housing costs without having to move, uproot the family, etc.
Coincidentally, Freddie Mac announced that EXACT plan for dealing with foreclosures.
I think you will find other banks following suit on this strategy because it just makes sense. The added benefit it that once the bank (or in this case Freddie) decides to sell the asset it will now be an income producing property that has been kept up, thereby making it more attractive to investors and allowing the bank to secure a higher price.
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