In an effort to help keep housing inventory levels from increasing, Fannie Mae announced a new program that will allow borrowers who are in foreclosure to lease back their homes. This will not only keep homes from the market but will allow Fannie Mae to generate some revenue to offset the huge losses, $18.9 billion in the third quarter they are taking on these foreclosed homes. This program should also prevent homeowners from damaging the property or removing items such as the stove, sinks, dishwashers, etc.. as the homeowner will be living in the home over the period of the lease.
“Jay Ryan, Fannie Mae’s vice president of equity investments, said the program would help to stabilize neighborhoods. The firm said Thursday that the program would qualify only those borrowers who had exhausted other options, such as a loan modification.”
To participate in this Lease Back Program:
- A borrower must agree to convey all interest in a property to the lender.
- The home must be a borrower’s primary residence.
- A borrower-turned-tenant would have to document that the new market rental rate is no more than 31% of his or her gross income and be released from any subordinate liens on the property.
If you are a property management firm or manager, I would suggest looking into this program to see how you can participate.
For more information on this program, read the article in the LA Times.
