Fannie Mae Lets Renters Stay
Good news for renters who've been dutifully paying their rent while their landlords failed to make the mortgages, and were facing eviction as a result: Fannie Mae will sign new leases with them. [NYT]
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That seems like such a "well duh" move. Good though.
This is one of those, what else are you going to doing? Kick them out and earn $000.00000 or earn $800 a month (or more). Tough discussion there. Nice of FM to be oh so kind to these people. Not really.
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@ChrisC1234: absolutely, a lease option or similar arrangement would be perfect here. I am glad they aren't going to punish the renters for the follies of the property owners.
So the tax dollars used to prop up Freddie Mac and Fannie Mae are now making them landlords in addition to mortgage lenders/holders? What's next for FM, kitchen & bathroom design? Appliance sales and service?
What about renters that start to have issues with the home, will FM send out repair crews to fix them up as to be in compliance with landlord/tenant laws?
It's nice that FM are getting money from the properties they now own but I don't see how this could possibly end well.
Unless I've misread, the bailout bill requires any mortgage company that took bailout money to honor the leases of tenants. Certainly cool that they're taking this a step further and letting tenants renew their leases instead of kicking them to the curb when it expires.
The rent these people pay should more then cover the cost of the property. I see no reason to evict these people as it was the landlord who was somehow floundering all the money.
@Adam Bourg: The alternative is not $000 but to sell the property and let the tenants fend for themselves with the new owner, while the taxpayer gets all or much of our "investment" back.
That would be the standard, prudent thing to do since these government agencies are not in the landlord business as a rule. The fact that they are willing to go the extra step to safeguard the tenants' living situations is above their mandated requirement and commendable.
I can't help but wonder if it is partially the renters faults for the foreclosures. Maybe they are behind on the rent, thus making the landlords behind on the mortgage. May not be the win win it appears.
@pb5000: Yeah. "Hey, should we let these people who are both willing and able to pay us thousands of dollars each month stay or should we throw them out and let the house stay empty in a market where selling anything is difficult".
@pb5000: We're talking about huge companies here, "well duh" moves are surprisingly difficult so they choose not to go that route ;).
@SuvarnarekhaLazork: I've heard of situations where the home owner, owing so much more than the house is worth, decides to foreclose while having renters. So while the renters keep paying rent, the owner just pockets the money instead of paying the mortgage.
@SuvarnarekhaLazork: A foreclosure is NEVER the renters' "fault". By signing a mortgage, you're 100% responsible for it even if your irresponsible tenants don't pay you a dime they owe you. That sucks for the landlord, but they still have to pay their mortgage on time. Before being a landlord, they should have adequate financial resources in place such that they can absorb the loss of income from a non-paying tenant until they can evict them.
@parad0x360: It should cover the cost of the property but usually doesn't. With easy credit, investors bought units with little down. In South Florida, the market is flooded with rental units, which is significantly depressing rental values.
@SuvarnarekhaLazork: Risk is for the poor. If you're rich enough, you can just get the taxpayers to bail you out if your "risks" don't pay off.
@ChrisC1234: "Rent to own" is called getting a mortgage.
This is absolutely not the way to go, as it only makes it harder to resell those houses later on, and just makes the financial problems go on and on.
There's also the matter that the government should not be getting into the landlord business.
I wish this would have come out a few months ago. I am a former renter who Fannie Mae evicted. I had signed a lease with my landlord not knowing that he had already entered into the redemption period. Turns out the dead beat hadn't made a mortgage payment since he inherited the property from his father. All he did was greedily pocketing the $1200 rent and brag about his new vacation home. Now I am stuck going court to try and get my security Deposit back. The only good thing is that the whole situation forced me to make a decision and finally buy my own home.
Wow, a SMART decision. Those are hard to come by nowadays. Fannie May signs new lease with the renter, continues to collect rent (possibly for MORE than the original mortgage payments were), the house doesn't stay deserted for months and deteriorate. It seems like a win-win situation for all.
Personally, I wouldn't mind if they somehow crafted some sort of "rent to own" situation for the people living in those houses.