Fannie Mae to Rent Foreclosed Homes

March 2, 2010

Thousands of borrowers on the brink of foreclosure will soon have the option of renting their homes from Fannie Mae under a new program announced in early November.

Under the new “Deeds for Leases” program, Fannie Mae will allow borrowers facing foreclosure to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that, as part of the latest effort to help troubled borrowers while keeping a glut of foreclosed properties from hitting the housing market.

But the new government-sponsored program is unlikely to help many distressed homeowners. In the first half of the year, Fannie Mae repossessed 57,000 properties, compared to only 1,200 properties that were leased back to owners.

Fannie Mae has hired an outside management company to administer the program. To qualify, borrowers have to live in the home as their primary residence and prove they can afford the monthly rent. The rent cannot be more than 31 percent of their pretax income.

Source: The Associated Press

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