Fannie Mae to rent out homes instead foreclosing

[Beaverhausen]

http://news.yahoo.com/s/ap/20091105/ap_on_bi_ge/us_foreclosures_rentals

WASHINGTON – Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.

The program will "eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Jay Ryan, a Fannie Mae vice president, said in a statement.

But the effort is likely to affect a relatively small number of homeowners. In the first half of the year, Fannie Mae took back about 1,200 properties through this process, known as a deed-in-lieu of foreclosure. That pales in comparison to the 57,000 foreclosed properties the company repossessed in the period.

While neither option is particularly attractive for the homeowner, a deed-in-lieu does less harm to the borrower's credit record.

The rental program is designed to help homeowners who don't qualify for a loan modification under the Obama administration's plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.

[itsrobert]

1. Wouldn't Fannie be responsible to fix these places up

if they have tenants living there?

[DearAbby]

2. Wouldn't the tenants be the former home owners.

would be good if the rent goes toward the final payment. "Rent to Own" technically would be like a reduced mortgage payment?

[metapunditedgy]

3. I wonder if this is related to recent court cases

where foreclosures were averted because the loan-holder documents were not in order. (And claims that this is the case for a lot of mortgages.)

Probably not for Fannie Mae, but the timing is curious.

[dixiegrrrrl]

4. What this is really about...

"This has exactly nothing to do with helping "homeowners."

It is entirely about Fannie not having to recognize the written-down value of these houses - that is, allowing them to hold the "mark" on the loan at it's original value, rather than recognize the loss.

The rental program is designed to help homeowners who don't qualify for a loan modification under the Obama administration's plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.

Fannie won't sell the properties because then they would have to recognize the mark"

http://market-ticker.denninger.net/archives/P2.html.

[Dreamer Tatum]

5. So, basically, foreclosure is bad, and not foreclosing is bad?

What a fucking joke.