Fannie Mae offers Homeowners a “Deed for Lease”
So you can't find ways to pay the mortgage anymore? There may be a way that you can remain in your home. Fannie Mae has developed a program that gives borrowers whom are close to foreclosure the option of turning in their deed and renting their homes for a year.
This gives a 12-month break to thousands of homeowners who now have a chance to breathe and think of ways to recoup and move in a year. And on a broader scale, it also helps government-backed Fannie Mae with losses; the foreclosure process can be expensive and for every month the homes doesn’t sell the lender is adding up more losses; Fannie Mae obviously cannot afford all of these foreclosures and this program allows them to creatively bring in some money.
Homeowners who choose the "Deed for Lease" program must reassign the deed to Fannie Mae. The homeowner then becomes a tenant and signs a 1 year lease, with a prospective month-to-month extension after that.
The program will temporarily help to resolve some of the uncertainty of foreclosure and keep families in their homes during an intermediary period. This program can also stabilize neighborhoods and prevent entire community property values from tumbling downward even more.
Earlier in the year the government developed several programs to help refinance and modify terms of mortgage loans however many homeowners don’t qualify. Fannie Mae executives say this rental program is designed to assist homeowners remain in their homes.
Before a borrower is eligible to rent back their home under the Deed for Lease program, they must have a deed-in-lieu of foreclosure agreement already in place with Fannie Mae, meaning the first step is to make arrangements to sign over the deed to Fannie Mae. This agreement means that the borrower has agreed to give the title to their property back to Fannie Mae in order to satisfy the terms of their mortgage.
Fannie Mae will outsource the administration of the program to a third-party property management company. Rent amounts are based upon the current market rates for the area, which will be established by the management company running the program.
• The home in question must be the primary residence
• The homeowner must transfer the Deed to Fannie Mae
• Homeowners must prove that they can afford the fair market rent
Currently Fannie Mae's sister company, Freddie Mac, has a similar plan for renting however, that policy requires the homeowner to allow the foreclosure to be completed and then you become eligible to lease but the program only allows month-to-month leases.
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