subject: Is Renting The Solution To Foreclosure? [print this page] Fannie Mae, a government sponsored enterprise, has begun a new program that is designed to stimulate the housing market. They are aiming to help people who are in foreclosure and do not qualify for any of the modification programs available today.
The program is titled "Deed for Lease" and is fairly self-explanatory based on the title. Deed for Lease will essentially allow the homeowner to give the title (or deed) to their home back to Fannie Mae and in exchange, Fannie Mae will let them live there and pay rent.
Deed for Lease lowers the client's payment to an amount that fits with the average rent charged in their neighborhood. Important to note, however, is that this is only a temporary fix. The original lease is for one year, and then depending on the situation, there can be month-to-month extensions.
The end goal for Fannie Mae is sell the homes at fair market value after the year of leasing. The month-to-month extensions will likely be dependent on the state of the housing market after the first year.
Fannie Mae also anticipates that this program will help stabilize the economy. It is better for other home prices when there are no foreclosures in their neighborhood, and occupied homes hold up better and retain value more than vacant homes.
This program could help people who are looking for relief from high mortgage payments and can provide stability for those who are falling into foreclosure. It also gives homeowners an opportunity to avoid having a foreclosure on their credit.
To take advantage of the Deed for Lease, the borrowers must complete a deed in lieu of foreclosure and then are allowed to lease the house back, providing that the rent is 31% or less of their gross monthly income.
Hopefully this program will serve its purpose and stimulate the economy and the housing market.
