Some homeowners now have the option of a lease back of their homes from the lenders AFTER they are foreclosed on.
Fannie Mae is implementing a lease back program called a Deed-for-Lease Program to help displaced homeowners, reduce vacant home vandalism, stabilize neighborhoods, and minimize further price erosion. Under this new program, Fannie Mae allows qualified property owners to continue to live in their homes for up to 12 months.
To qualify for the program, the property and the occupant must meet certain criteria that include:
- The foreclosure must be a Deed-in-Lieu of Foreclosure (voluntary return of deed to lender).
- The loan must be a Fannie Mae loan however FHA, VA, Second Mortgages, and USDA Rural do not qualify.
- Zoning or Homeowner’s Association must allow rentals.
- Property must be habitable and cost to repair cannot be prohibitive.
- Property meets local rules and laws.
- Market Rental Income will cover ongoing maintenance and management costs.
- Occupant’s income must cove rental payments and not be more than 31% of gross income.
- Occupants have been maintaining the property in good condition.
- Number of occupants is appropriate for the number of rooms.
- The property is to be used as a primary residence.
- Pets are allowed with renter’s insurance.
- Occupants over 18 are subject to a background check.
Under this new process, the lender works with local property managers to handle the lease back process and the long-term lease. Once the home is foreclosed, the lender sends your information to a property manager. The property manager will make the determination if the home and the owners meet the eligibility criteria under the Deed for Lease program. The homeowner will work directly with the property manager.
In some cases, the lease back program is also available for current tenants. The homeowner must provide the property manager a copy of the current tenant lease and assist with contact between the tenant and property manager.
There are very stringent timeliness associated with this new program. Such as, if the property manager is not able to make contact with the homeowner within five business days of obtaining the referral, the lease back option will no longer be available.
For additional information about the Deed for Lease Program, including full details on program eligibility, go to www.efanniemae.com.
Fannie Mae is a government-sponsored entity that provides funds to mortgage bankers and other lenders so that they may lend to homebuyers. The mortgage investments are primarily funded through debt securities.
Written by Andee Allen. She is freelance writer, Strategic Media Coach/Consultant, Real Estate Investor, and California Realtor (License #01854926). You are welcome to contact Andee at andeeallen@gmail.com or on her website at www.strategicmediacoach.com.
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