The Government has tried it's hand in the mortgage industry, insurance business, the banking industry, and health care, but they are now branching out to include trying their hand as property managers as well via Fannie Mae.
Fannie Mae just announced last week that they will begin offering a brand new concept of a "Deed for Lease™" program. They have had deed in lieu of foreclosure or short sale, but the new program is different. It allows the borrowers to voluntarily transfer their property back to the lender and then lease the property back from them at the current market rate. The program is designed for borrowers who do not qualify for or have not been able to obtain other loan-workout solutions, such as loan modifications, but do not wish to move or go through a short sale.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance also may be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31 percent of their gross income.
This will be a new trick for them, and I'm interested to see how this plays out for them. Given their current response times and infrastructure I hope they contract out the actual management of the properties to confident local property management companies or else this is bound to be a disaster for them.
Click here to check if your loan is eligible to participate in this program.
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