Fannie Mae to rent out homes instead of foreclosing

[babylonsister]

Fannie Mae to rent out homes instead foreclosing

Homeowners behind on their mortgage will have a way to stay in their homes under new Fannie Mae plan

1 of 1

By Alan Zibel / Associated Press


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.

more...

http://www.michaelmoore.com/words/latest-news/fannie-mae-rent-out-homes-instead-foreclosing

[napi21]

1. It sounds like a good plan, but how much is the rent?

It would certainly help people who got behind in their payments for some reason and can't catch up, but are stilll able to make their normal mtg. pmt. I can't see it doing much for the unemployed who simply can't get enough $$ to make the payment though. Unless they are offering some fantastic rental payment arrangement, there's still a lot of people who won't have any choice but to leave.

[Horse with no Name]

2. I am very ambivalent about this

First of all, they have to sign away any equity they have in the house. The lease is for one year AND they still have to qualify> Not that this is a bad thing, but if as a lender they put people in mortgage that they couldn't afford--that was irresponsible lending. Now they want to all of the sudden be all responsible and make sure they qualify since they are the landlord? Gives me a sick feeling in my gut.
Not saying that it isn't a good deal to prevent getting an immediate kick to the curb, but it puts the federal government into renting homes AND the person will still have to move. It isn't about "saving someone's home", it is about keeping someone in the house to do the upkeep until Fannie Mae can sell it.
It doesn't appeal to my sense of fairness at all.

[napi21]

3. You have some good points there, but if the pending foreclosure

is because of a temporary loss of a job and the owner gets another job, they should be able to qualify for a new mtg. I'm not saying this is the answer to all the problems, but I can see it helping with some, and that's a good thing.

[Horse with no Name]

4. This is strictly for those that cannot qualify for a mortgage

That is why I am ambivalent about it. It seems a win-win for Fannie Mae but a dead-end for the homeowner.
It is taking advantage of desperate people.

[marketcrazy1]

5. it is also

a convenient way for this bankrupt mortgage giant to keep a quarter billion or more in losses off their balance sheet for the next year............... just sayin!!

[Horse with no Name]

6. Ugghh

I hadn't EVEN considered that possibility.