Federal mortgage giant Fannie Mae today unveiled a new leasing option they hope will ease the pain of foreclosure. Basically it lets a homeowner facing foreclosure stay in the home by signing a lease that’s tied to the transfer of the house back to the lender.
The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.
I’ll take a deeper look at this Friday. Basically, it’s a way to try and buy some time for people who are losing their homes.
But it’s clear from the detail that it will require lots of cooperation between the lenders, the homeowner and the government to make it work. And we haven’t seen a whole lot of that kind of unity when it comes to problems like short sales.
“It’s very clear that it will help some people. It’s just there is no silver bullet to (the housing crisis) and this program certainly isn’t either,” said Aaron Dickinson, a local Realtor who writes a detailed blog on the Twin Cities housing market. “A lot of this might just be pushing the rock farther down the road.”
He also worries about the government’s new role as landlord in these cases.
The lease would be for up to a year “with the possibility of term renewal or month-to-month extensions after that period,” according to Fannie Mae.
Thoughts on the plan and its potential? Post below or contact me directly.