Fannie Mae Program Turns Homeowners into Renters
If you’ve gotten behind on mortgage loan payments and are facing foreclosure, there may be help from a Fannie Mae program. The housing agency is allowing some homeowners to voluntarily transfer their properties back to their mortgage lenders and stay in the homes as a renters. Here are some details of the Deed-for-Lease Program.
Mortgage Refinance or Modification
You may have tried unsuccessfully to do a mortgage refinance or loan modification. Fannie Mae’s program allows you to complete a deed-in-lieu of foreclosure and lease back your house at the current market rate for up to 12 months. Your mortgage must be owned or guaranteed by Fannie Mae. The idea is that even though you are struggling to keep up with mortgage payments, you might be able afford a lower rent.
“This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” said Jay Ryan, vice president of Fannie Mae, in a statement.
Who Can Qualify?
To participate in the Deed for Lease program you must:
- Live in the home as your primary residence
- Be released from subordinate liens on the property, such as a second mortgage
- Be able to document that the market rental rate is less than 31% of your gross income
- Submit to a credit check
- If the property you live in has tenants, they also may be eligible to rent through the program
- Get renters insurance if you have a pet
- Pass a property inspection
- Not have an illegal activity on the premises
Advantages to Rental Program
So why is Fannie Mae letting people rent back their properties instead of foreclosing? One reason is that it is better to keep people in a property rather than let it sit abandoned. Foreclosed homes that sit abandoned often fall into disrepair or attract vandals and and other criminal activity.
Mortage Lenders as Landlords
Some lenders, however, are reluctant to get into the landord business even if homeowners are struggling with mortgages. “We’re in the lending business. We’re not really equipped to be landlords,” Tom Kelly, a spokesman for JPMorgan Chase, told Time magazine.
Contact your mortgage loan servicer to discuss participating in this program if you’ve exhausted other options such as a trying to refinance, sell your house, or get a loan modification.
Tags: mortgage, mortgage lender, mortgage loan, mortgage refinance, mortgages, refinance
