Fannie Mae To Stop Evicting Renters From Foreclosed Properties
As a rule, banks generally consider renters to be a liability and want nothing to do with them. When a property goes into foreclosure, these renters are usually unceremoniously tossed out and the building resold. Now Fannie Mae has announced a new program whereby renters in good standing will be allowed to stay in their apartments — if the property is owned by the government-controlled home funding company.
Marketplace Money interviewed Jason Allnutt, a vice president at Fannie Mae.
"You have a family who is networked into the neighborhood, into the school system, into the job market, and it's very, very difficult to be wrenched out of that network and put on the street to look for a new place to live," he said.
The policy seems like a step in the right direction, but if only a small one. Currently, Fannie Mae only owns about 10% of all foreclosures. So, how can you tell if your building is owned by Fannie?
There should be an attorney's name on the foreclosure notice.
"If you call that attorney and say, "Is this a Fannie Mae home?," I will make sure that those attorneys are ready to receive those phone calls and ready to help those folks who are renters in these properties transition from that foreclosure into a new lease," said Allnut.
Fannie tries to cut renters some slack [Marketplace Money]
Fannie Mae starts new foreclosure rental policy [Reuters]
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Comments:
Good plan, plus if someone is living in the home it's less likely to be broken into and vandalized. It's really a win win and something smart banks have been doing independently of FNMA and FHLMC
Plus, a lot of landlord-buyers prefer to buy with renters already there. There's can be a long lag-time on finding new renters otherwise, and with existing renters at least you know they pay on time, take good care of the place, etc. -- or don't.
About 15 years ago, the condo I was renting was foreclosed on. I knew this was coming, as the sent me a notice. I called the bank, and spoke with the person in charge of foreclosed parties there. We set up a meeting at the condo, and they brought a realtor with them. We made an agreement there that they wouldn't charge us rent, but we had to keep up the condo. They would give us 24 hour notice before showing, and would only show it to parties interested in it as rental property.
It was a good situation all around. They did break the 24 hour agreement a couple of times, but they always called first. And it wasn't a big deal. And we got an even better landlord in the process.
@attackgypsy: That's incredibly lucky, I think. I think most banks nowadays could care less that the property is actually your home.
What if the renters want to buy the home? Fannie Mae is not negotiating fairly with some, IMO. They want more than 5% paid in earnest money -- not down payment -- at the time the agreement is signed. This in a deal with a HUD-backed 20% down payment and a mortgage. In a rough neighborhood. I guess they just want some neighborhoods to be rental property.
Nothing like throwing even more instability into the country by possibly throwing renters out of their place. Some were getting told to leave with little notice. I don't know how these people were supposed to come up with deposits to get a new place. I doubt anyone was handing over their existing deposits readily.
@Flame: I was one of these poor renters, and was aware of the program, but from my perspective, there were too many better options. We ended up getting a much bigger place, closer to work for a little more than we were paying at our old place.
My advice to these renters is to get a short term lease or month to month out of it just in case you don't like the landlords (my experience is banks aren't very good at it), and use the extended time to find a better situation.
@Eyebrows McGee: That's my thought as well. When I was a landlord, good renters who paid on time were worth their weight in gold. It's so much easier to sell a building full of tenants than an empty one, the income is already there.
A single family home might be different, but for something like an apartment building, those good renters are a huge selling point.
Frankly, I'd prefer to give that kind of advantage to the renters than bribing the actual homeowners into NOT wrecking the place.
They only figure this out NOW?
No wonder why the banks are going belly up.
"these renters are usually unceremoniously tossed out"
Well what kind of ceremony is to be expected here?
When a property goes into foreclosure, these renters are usually unceremoniously tossed out and the building resold.
"You have a family who is networked into the neighborhood, into the school system, into the job market, and it's very, very difficult to be wrenched out of that network and put on the street to look for a new place to live," he said.
So when times are good the tenants are treated like chattel. When times are bad and the Mega-Lithic Monster Corporation is in trouble, all of a sudden the plight of the poor people is a noble thing to be concerned about.
When the economy gets better that flowery statement will come back to bite those hypocrites in the arse.
That is nice and all, but what if there is a way Fannie Mae could uhhh detox some of their holdings by getting actual mortgage paying borrowers into/buying those homes?
There has to be a way to game this. Rent from someone who is going to go into foreclosure at a rediculously low rent since the owner doesn't give a crap. So could it be possible to pay say 25% of market rent by giving a kickback to a deadbeat homewoner?
Ok so lets take a closer look at this. As everyone well knows it is impossible for a renter to get anyone on the phone. If the renter tries to contact the servicer, the servicer will tell the renter that they need permission from the property owner to speak about the situation.
I would also think that it is safe to say that majority of renters who are residing in a property that has been foreclosed on, have not made any payment for a minimum of 90 days. So who is going to get in touch with these renters and explain to them what the new rent payment will be and to whom they should be sending the money each month to?
The biggest problem right now is that trying to get a straight answer is impossible.
Also is it going to be explained to these renters that it makes much more sense for the investor to keep someone in the home? of course they would rather have someone in the home to maintain the property and it also becomes much more marketable to a potential buyer when the home has furnishings and bodies in it. So how long will the renter be able to stay in the property? will Fannie be issuing new rental agreements?
Well good. These poor renters are some of the people that I feel the worst for. They do what they are supposed to, pay their rent, and still get kicked out. Wish that would apply to all renters though, and not just the ones owned by Fannie Mae