Borrowers given rent option

By ALAN ZIBEL Associated Press - 11/6/2009


WASHINGTON — Can't pay the mortgage? You still might be able to stay in your home. The government-controlled mortgage company Fannie Mae is going to give borrowers on the verge of foreclosure the option of renting their homes for a year.

The change announced Thursday could give a temporary break to thousands of homeowners, but critics question whether it will only add to the mushrooming losses at the company, which has received billions in taxpayer money.

The new "Deed for Lease" program will enable home-owners to transfer title to the property to Fannie Mae and sign a one-year lease, with potential month-to-month extensions after that.

It also helps save money because the lender does not need to complete the often lengthy and time-consuming foreclosure process.

The 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," Jay Ryan, a Fannie Mae vice president, said in a statement.

It also does less harm to the borrower's credit record.

"It shows that you put your best effort to work out a solution," said Gabe del Rio, the director of home-ownership at Community HousingWorks of San Diego.

However, Mike Himes, the director of home-ownership services at NeighborWorks Sacramento, said the industry should push harder to modify loans at lower monthly payments.

"The preferred option is allowing people to retain ownership," he said.

Fannie Mae executives said the rental program is designed to help delinquent homeowners who don't qualify for a loan modification but still want to stay in their homes.

To qualify, homeowners have to live in the home as their primary residence and prove that they can afford the market rent, which will be established by the management company running the program.

Rents are based on current market rates.

The plan is expected to be particularly attractive in places such as Phoenix or Orange County, Calif., where homeowners are stuck paying large mortgage bills on properties that are now worth far less than they originally paid.

At the same time, rents have been falling in those areas.

So by renting the same house, former homeowners could wind up paying far less.


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Tulsa World Reader Comments
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Few Clothes, America (11/6/2009 6:11:39 PM)
Oh God! I had hoped Fannie Mae was dead.

Dr. Strangelove, Tulsa (11/6/2009 7:38:22 AM)
Sounds like a hell of an idea, where do I sign up?

OkieDad, (11/7/2009 6:13:51 AM)
Hmmm...okay...if these people can't pay their mortgage, how in the heck do you expect them to pay rent? DUH! How bout stop lending to people who shouldn't had a loan to begin with?

007, Tulsa (11/7/2009 10:23:05 AM)
WOW



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