Fannie Mae Announces Deed for Lease Program
Fannie Mae announced this week that it would allow eligible homeowners to rent their own homes rather than face foreclosure. The “Deed for Lease Program” allows certain homeowners to remain in their homes by first voluntarily transferring the property back to the lender, and then signing a lease.
The rise of foreclosures in the United States has left many homes vacant and owned by the former lenders. Homes left in the hands of lenders often fall into disrepair and impair surrounding home values. Lenders are generally in the business of strictly lending, and have little experience and resources to furnish upkeep on foreclosed homes.
The Deed for Lease program is aimed at helping borrowers with mortgages owned or guaranteed by Fannie Mae, who do not qualify for a refinance or loan modification. It will act to keep a roof over troubled borrowers’ heads, allowing a second chance to those facing financial uncertainty. Also, a steady stream of income is provided to the lender from the lease of the property.
According to Fannie Mae, borrowers must live in the home and use it as a primary residence, and they must be released from any subordinate liens. The lessees must prove that they can afford the market rate of rent, and payments cannot be more than 31% of the borrower’s pre-tax income. The leases may be up to 12 months, with a possibility of a renewal at the end of the term for month-to-month extensions.
In addition, homeowners facing foreclosure may always choose to “short sell” the home, in which the home is sold for less than the mortgage balance, and the lenders may forgive the difference, or opt for a “deed in lieu,” in which the borrower voluntarily forfeits the deed to the lender, and the debt may be erased.
The attorneys and staff at Ritter & Randolph, LLC are experienced in representing clients facing the possibility of foreclosure and those already in foreclosure.
For more information on the Deed for Lease Program, visit www.efanniemae.com.
