Fannie Mae Program Trades Mortgages for Leases; Homeowners Rent Their Homes

Fannie Mae has instituted a program to stop foreclosures and allow homeowners whose mortgages are owned or guaranteed by Fannie Mae to essentially trade their mortgage for a lease and remain in their homes. The plan is another attempt to cap the amount of foreclosures and put struggling homeowners in a position where they can keep a roof over their head. These individuals who qualify for this program are ones who are not able to take advantage of the Obama Administration’s loan modification program. There are similarities in the two programs in that there is a limit on the monthly charges the homeowner can incur. The rent cannot be more than 31% of the borrower’s pre-tax income.

There are those who feel this is only a delay of the inevitable because the property will be sold, but is this a bad idea for Fannie Mae? Rather than foreclose on a home and kick a homeowner into the street, then resale the home at a possible loss, Fannie Mae still collects money from the property and homeowners aren’t kicked into the street.

However, it will take time to see if there are any long-term problems but the idea seems to be solid. For instance the lease is for 12 months with a possible extension, the homeowner is responsible for upkeep to the home, and the home is still on the market for sale so Fannie Mae is collecting money on a property that is for sale rather than losing a homeowner to a default, having a property for sale with no payments coming in and Fannie Mae doesn’t have to provide upkeep for the home. Also, the homeowner is allowed 12 months to get on their feet, look for another home, and have a place to live.

Do you think this is a good step in the direction of keeping foreclosures down and allowing struggling homeowners a chance to catch-up or is this bad business on the part of Fannie Mae?

This is something that is very similar to buying a vehicle.  While some are looking for Craigslist Used Cars in GA others might be interested in leasing from a car dealership.  It is amazing how much homes and cars have become like each other over the last few years.  Taking the time to research past events will help both home buyers and car buyers.