Yahoo Finance Article

On stuff like this - it pays to read more than one article - as each article has extra info... So - I've provided the articles out there thus far...

Mortgage finance company Freddie Mac said it will allow some borrowers to rent out their homes after losing them to foreclosure.

*** Comment -- the foreclosed upon owner gets to keep the rent after they officially lost the house???

It goes on to say....

The goal of the new policy is to prevent properties from becoming vacant so they won't fall into disrepair.

***Comment - now - I really don't think that renters will be kicking in anything to repair the owners property.   But it would help in keeping the heat on during the winter vs. having to winterize it etc. and keeping the snow shoveled - and help prevent vandalism.  Since some renters can't count on a distressed owner fixing something critical such as a furnace - my bet is that a renter in that situation might just get the fix done to have the heat and then deduct it from their rent payment... (not always authorized of course - in their rental contract)    But per another article -  Freddy is going to allow owners to rent back after being foreclosed upon - at market rates.  Even then - it is debatible how much of a repair they would spring for.   So - Freddy is now getting into the landlord business....... Wonder how much in govt money and new hires that will cost to administer...

The article goes on to say....

Freddie Mac said it will allow renters to remain in their homes even if their landlord enters foreclosure.  Freddie currently has about 8,500 properties in the foreclosure process, but many of those are vacant.

"Keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market," said Freddie Mac Chief Executive David Moffett.

Fannie Mae said it has stopped about 20,000 foreclosure sales and halted 6,300 evictions of owners or renters this winter.

"Under Freddie Mac's new policy, tenants and former property owners need to demonstrate that they have enough income to pay the rental bill."

*** Comment -- former property owners??  They aren't paying the rental bill.  I think someone mis-worded this in the release....

It goes on to say....

Freddie Mac also said it would consider reinstating a mortgage for those borrowers who can qualify for a modified loan.

Both Fannie Mae and Freddie Mac also said Friday they would extend a previously announced suspension of evictions through the end of February.

***Comment -- (Presumably - to keep people from having to move in the cold?  More likely - perhaps they just want the heat to remain on during that time....)

But a Marketwatch article - states that is is March - not Feb (like the Yahoo Finance article) - in the headline - but not in the body of the article.  Go figure!

Marketwatch Article

And that article states:

"It may be that a borrower can afford a market rent price but can't afford all the ancillary costs of maintenance," said Freddie Mac spokesman Brad German.  

*** Comment - Which is precisely my point.  Why would they kick in for maintenance?

It goes on to say..

"This would get them a smoother transition to find a new home or until Freddie Mac sells the home."

*** Comment -- Well - they sure won't be buying a new home after that!  Renting one?  Perhaps - if they have more than a few months deposit to put down.. since their credit will be trashed.  "Place to live" would have been better words to use (such as in a USA Today article)

"Fannie Mae will also provide financial assistance for a "transition" to individuals that decide to vacate the property."

*** Comment - I wonder how the owner will know about this.  A mailing by Fannie to them?

However, he argues that program will have costs. Fannie Mae and Freddie Mac will likely need to hire property managers to collect rent. "Fannie Mae is not set up to be a landlord," he said.

*** Comment - exactly my point from above....

USA Today Article

Details of the program:

•Leases will be on a month-to-month basis.

•Tenants and homeowners will only have to pay market-value or existing lease rents, not the mortgage payments. Freddie Mac will hire a property management company to determine that amount.

•Tenants and homeowners must be able to show proof that they have enough income to pay the monthly rental amount.

•Freddie Mac will also explore loan-modification options that might be available for some borrowers.

In mid-December, Fannie Mae also rolled out a policy that allows renters in a property that is being foreclosed on to rent that home rather than be evicted. It does not include homeowners. Up to 10,000 families are expected to be helped by Fannie's rental policy; Freddie expects about a 30% acceptance rate.

The Federal Reserve this week announced a policy to help some distressed homeowners avoid foreclosure. The Fed said it would work with companies servicing mortgages now owned by the Fed to modify qualifying mortgages of homeowners that are 60 days or more delinquent on payments.

Fannie and Freddie combined own or guarantee about half of the $10.6 trillion in outstanding U.S. home loan debt.