Fannie Mae is implementing the Deed for Lease instead of Foreclosures
FANNIE MAE NEWS RELEASE - September 5, 2009
WASHINGTON, DC -- Fannie Mae (FNM/NYSE) is implementing the Deed for LeaseTM Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.
"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps 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."
The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.
Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.
For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.
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Bill,
Interesting, This is the first I have heard of this program and it was announced two months ago!
PG
We will see how long this lasts. Thanks for the update on this program.
Bill, thanks for the information. I remember hearing about it, but didn't get a chance to read it yet. Interesting stuff.
Thanks for bringing this valuable information. . .first time I hear of it
First I heard of this as well. I do know that they have been cancelling foreclosure sales already scheduled so to not flood the market with REO's and losses.
Your blog is one to bookmark. Always valuable information. Thank you Bill,
Fannie making a good decision for a change, what a concept! This is a constructive bullet in the recovery gun. I also agree with Harry. We'll see how long it takes Fannie to get its operational guidelines to the lenders. The interesting part will be to see it the lenders then carry these out.
I would hope that more lenders would do this for short sales also.