What’s up with Fannie Mae? First they stop all foreclosures and evictions over the holidays (originally through January 9, 2009, but extended through end of Jan). See Washington Post article here. Now, they are allowing tenants of foreclosed properties to continue to rent their homes on a month to month basis or offer rellocation money (“cash for keys”). See New York Times article here when the plan was announced. Where is the gotcha? This week Fannie published some of the crazy conditions:
- The occupants must have been renters before the foreclosure sale
- The property must be single family (house including 2-4 units, condo, trailer houses, etc.)
- The property must meet local codes for rental property
- Rent will be renegotiated based on local market
- No credit or background checks on the renters
- No payment histories or security deposits required
See Fannie Mae’s FAQs on the program here.
If an occupant does not meet the requirements somehow, Fannie says it will still offer cash for keys. (I would bet the occupants had to have been tenants before they will be offered cash assistance to move.) Fannie says it will work with Section 8 tenants (federal law requires it, but at least they acknowledge it), and if the property is sold the lease will of course go to the new owner of the property. This is Fannie’s new “National REO Rental Policy.” I wish it applied to home owners they foreclosed on, and not just rental properties, but this is a good second step (the first being the moratorium). Freddie has yet to come along (kinda funny give that both Fannie and Freddie are gov’t controlled right now). Not surprisingly the lenders that took billions of bailout money have no intention of following Fannie’s lead. “We follow the law” and evict’em all says JPMorgan Chase said. Story here. More like, “we will take your money, spend it as we wish, not tell you how we spent it, and evict everyone from our foreclosed properties regardless of the circumstances.” What a great industry and a great name — the Hope Now Alliance. More on them here and here.
Filed under: Advice for Borrowers, National Foreclosure News | Leave a Comment »
The National Consumer Law Center, the best source of US consumer law information, has recently started a webpage listing the various lender programs, the list of lenders in bankruptcy, and those that have just failed. Page here. It is a new page and it will be undoubtedly updated further in the future so check back to see if the lender you are interested in made the list.
