Fannie Mae Allows renters to Stay in Foreclosed Homes
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
1. The new policy applies only to renters occupying the home at the time of foreclosure or deed in lieu of foreclosure
2. You are the property's primary occupant, and it isnt an investment property.
3. You can't be in bankruptcy.
4. The rent cannot exceed 31% of your monthly gross income.
5. 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
6. Renters will be charged market rate rent under the new lease
7. No security deposit will be required
8. 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.
9. 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.
Thanks for Reading
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