One portion of the legislation that would seem somewhat problematic is the requirement that “Before entering into a lease buy-back agreement, investors would have to demonstrate that the homeowner has a reasonable ability to repurchase the property.” Well, if a homeowner is in foreclosure, it’s probably going to be impossible to prove they can repurchase the property. The effect of that requirement is homeowners will actually have fewer options, rather than more.
That’s helpful?

In many foreclosure cases, a lease-buyback arrangement really isn’t going to be in the best interest of the homeowner because if an investor is interested, there’s probably equity in the property. Lease buybacks are attractive to the investor because of the lower cost requirement to purchase the property and often attractive to the homeowner who hopes to recover from their financial struggles and stay in the home. It often doesn’t work out that way though. I’d prefer to see the homeowner’s equity in the homeowners hands through a straight sale either to an investor or from exposure on the open market.

I can certainly see tightening the disclosure requirements to include something along the lines of “You are selling your home, if you can’t buy it back you’ll lose all your equity” in extremely large bold letters at the top of every document used in a lease buyback arrangement. That statement is pretty easy to understand. I don’t see the benefit in government limiting homeowner options by effectively outlawing the lease buyback agreement.

Should government outlaw personal responsibility?