Quite a bit of the housing stock in the urban areas of New England consists of triple-decker, multifamily buildings.  Mark Jewell of the Assoicated Press writes that the slump in the housing market is taking its toll there, as well:

LOWELL, Mass.—When Osman and Rose Bangura bought a two-family home three years ago at the peak of a housing boom, they saw a good investment in the $400,000 colonial, just a quarter-mile from the Merrimack River and the renovated 19th century textile mills now helping to fuel Lowell's rebirth.

For a couple years, they lived upstairs while rent from a downstairs tenant helped cut hundreds of dollars off the monthly payment they would have faced if they'd bought a single-family home.

But, like many owners of southern New England's nearly 320,000 two- and three-family homes, the Banguras ran into trouble. Their monthly payment on a pair of adjustable rate mortgages jumped from about $2,900 last summer to nearly $4,200 -- out of reach for a couple with $50,000 in annual income, supplemented by $1,150 in monthly rent from their tenant, a single mother of two children.

Similar stories are playing out across the densely packed cities and pricey housing markets of southern New England, where generations have found older two- and three-family properties more affordable routes to home ownership than single-families.

Congressman Raul Grijalva (D-AZ) introduced H.R. 6116, the Saving Family Homes Act of 2008 today: 

The Act would grant homeowners whose mortgages have been foreclosed the right to petition a judge to allow them to remain in the home as renters, and pay a fair market rent. The rent would be set by a court-appointed appraiser and adjusted annually for inflation.

The Saving Family Homes Act is one of the few proposed remedies for the current mortgage crisis which requires no expenditure of federal funds or additional bureaucracy, while giving immediate relief to millions of families facing foreclosure and preventing home vacancies that harm neighborhoods.

To prevent abuse by speculators, the Act limits eligibility to mortgages on single-family, principal residences, occupied for at least 2 years, which sold for less than the median home value in the metropolitan statistical area in which the home resides or the median value in the state if such information is not available.  

Dean Baker provides a clear and concise description of this "Own to Rent" plan in the most recent issue of Economists' Voice. The key advantages of this plan:

I confess: I get annoyed beyond measure when I read articles like this one from Alan Zibel and J.W. Elphinstone of the Associated Press, which ran in my local paper this week. It manufactures drama where none is warranted. Here's the hook:

One of my biggest concerns about the ongoing mortgage situation is the continuing (or even growing) use of anecdotes about what brokers and lenders did to excuse homebuyers from taking any responsibility for their actions.

Joe Nocera had fascinating column in Saturday's New York Times about how FDIC Chairwoman Sheila Bair's idea about how to fix the mortgage mess and how the political system moved toward her idea.

Treasury Secretary Hank Paulson, December 6, 2007, talking about the Bush administration's mortgage program:

"...the risk of litigation should be manageable."

 

Treasury Secretary John Snow, July 18, 2003 and throughout his tenure talking about the federal budget deficit:

"...our deficit level is manageable..."

 

Does the second statement give anyone confidence about the first?

 

It may not be a slamdunk after all.

The bailout of homeowners who, because they financed their home with an adjustable rate mortgage and took out a home equity loan, are having so much trouble making their monthly payments, may not be as likely today as it seemed just a week or so ago.