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November 12th, 2009

How To Rent Your Home From Fannie Mae

Categories: Market Update

Fannie Mae Has Announced A New Program That Allows Troubled Homeowners To Rent Their Own Homes.

According to the Wall Street Journal, Fannie Mae announced that it will consider allowing troubled homeowners to rent their homes as an alternative to losing them in foreclosure or eviction.

The program that was structured to allow borrowers to transfer the deed of their property to Fannie, allows the homeowner to stay in the home, offering them greater security and time to search for other housing options.

The borrower must still qualify for the program and show that they have enough income to pay fair market rent for the home. In most situations the borrower will be able to sign up to a 12 month lease, before being required to move out.

The “deed for lease” program will still damage the borrowers credit score, but it is not as damaging as a regular foreclosure.

Some details about the program:

1. The home must be held my Fannie Mae. Fannie has a site that will allow borrowers to look up their home and determine if their loan is held by Fannie Mae. Fannie Mae Loan Look Up Site

2. The program is NOT available to homeowners who are not currently delinquent on their mortgage payments. The current owners, also have to demonstrate that market rent would not exceed 31% of their income in order to qualify for the program.

3. According to Fannie Mae, it is unlikely that the tenants would be able to buy their home back at the end of the lease. What is more likely to happen is that Fannie might offer to extend the lease or put the home up for sale to the most qualified buyer. It is not likely that the tenant would qualify to buy the home back since their credit scores will be greatly effected by the delinquency.

4. If Fannie determines that the borrower can in fact afford their current mortgage, they will not be eligible for the program. Fannie does not anticipate having people intentionally default, due the program guidelines.

5. If there is a 2nd lien holder on the property, that lien must be released before Fannie will be able to complete the lease back.

This is a fairly complicated program and not everyone will qualify. But if you you think you might qualify here are some additional resources for you to use. Click here for a full list of rules and regulations, Fannie Mae’s FAQ, Borrower Instructions.

Posted by Jennifer Burroughs //

This entry was posted on Thursday, November 12th, 2009 at 2:10 pm and is filed under Market Update. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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