The Housing Chronicles Blog: FannieMae to allow renters to remain in foreclosed homes

Thursday, December 18, 2008

FannieMae to allow renters to remain in foreclosed homes

In an attempt to prevent throwing out renters of foreclosed properties onto the street, FannieMae will act as an interim landlord for nearly 4,000 tenants. FreddieMac is expected to follow suit. From a story:

Fannie Mae, the battered mortgage giant, has agreed to act as an interim landlord for thousands of tenants living in foreclosed homes around the country.

Fannie (FNM, Fortune 500) will sign new leases for the approximately 4,000 renters in its foreclosed properties, said spokesman Brian Faith. These tenants would otherwise face eviction, even if they had been paying their rent on time, because of the owners' failure to pay the mortgage on the property.

The policy will go into effect on Jan. 9, Faith said. He said Fannie will observe an existing moratorium on new evictions. Both Fannie and Freddie Mac have agreed to temporarily hold off on evictions...

Freddie Mac (FRE, Fortune 500), the other government-backed mortgage giant, has not announced any changes, but a spokesman hinted that the company is developing a new policy.

"We are working through the operational details to provide something by January," said Freddie spokesman Brad German.

German said it was in his company's best interest not to evict responsible renters.

"If it's an investment property, with multiple units, we'll do our best to keep our tenants in the units, for all the obvious reasons, including that it's easier to sell the unit to another investor," said German...

So why wasn't this rather obvious and common-sense approach implemented months ago? Good question!

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