Fannie Mae Allows renters to Stay in Foreclosed Homes
A National Crises
There was so much interest in this new Fannie program that I dug a little deeper and wanted to share some of this.
The
problem is that many renters who pay rent on time are finding
themselves under eviction, because their landlord has lost his
property. Its made victims of well intentioned people who played by the
rules. The
magnitude of the problem is really quite sad.
More than 20% of
the properties facing foreclosure nationwide are rentals. The Mortgage Bankers Association thinks
as many as 20% of all foreclosed homes are not owner occupied. Many
speculators did not have the deep pockets and couldnt hang on. The
result is really a national tragedy.
Fannie Maes National REO Rental Policy
Now a National Landlord
Here are some of the highlights
- The new policy applies only to renters occupying the home at the time of foreclosure or deed in lieu of foreclosure
- You are the property's primary occupant, and it isnt an investment property.
- You can't be in bankruptcy.
- The rent cannot exceed 31% of your monthly gross income.
- Family
detached homes, and manufactured housing, where the homeowners
associations (HOAs) do not prohibit rentals. The policy applies to all
renter-occupied single-family Fannie Mae REO
- Renters will be charged market rate rent under the new lease
- No security deposit will be required
- The
occupant agrees to be responsible for regular maintenance, to keep the
property in good condition, and to permit marketing of the property for
sale.
- Fannie Mae reserves the right to market the property
while a tenant is occupying the property. The property may be sold to
an investor subject to the lease.
So, Fannie Mae will allow
renters to stay for one year with the possibility of month to month
extensions. Fannie gets some needed rental income, the real estate
community hopes to see some price stabilization in the market place.
Fannie clearly hopes that one year down the banks and housing markets
will be viable and prices higher. This is a good program, it will be
interesting to see whether the private markets will institute similar
programs and begin to tighten the supply flow and help homes recover.
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