Is Fannie Mae a Good Landlord?

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Real Estate Agent with Local-n-Global Realty, Cleveland and International Real Estate Solution BRK 2007000844
https://activerain.com/droplet/rr2

Is Fannie Mae a Good Landlord? Should it be?

We all read about new governmental initiatives allowing Fannie, HUD and the banks to rent out their properties. Let me share my first experience in representing the buyers who are buying the property from Fannie Mae with the tenants in place.

Foreclosed properties for sale      First, the sellers want tenants to stay at the house at least for 3 months after title transfer. That sounds reasonable to my clients. That sounds not bad to me. Except one little thing: I know that the City has an ordinance which requires new rental registration when either there is a change in ownership or a change in tenants. All our clients are aware of this and know that   they should be in compliance.

So, we ask the sellers's agent to provide us with the lease agreement which we receive. It's a good written agreement, nothing is unusual or odd about it. There is a high chance that new owners might want to keep these tenants if they make their payments and bring no troubles. Why not?

Surprises start when we call the City.

- Tenants in the house your clients buy are squatters! - that's exactly what I heard today from the City official.

- What do you mean? I know that there is a legitimate Lease agreement between Fannie Mae and the tenants.

- It's never been registered, house has never been inspected and certified for rent. Tenants may be in a big trouble because of these owners' negligence.

Oops!

Hopefully, these tenants will not get in troubles because we notified the seller's representative immediately, and, hopefully, they will take care of bringing their rental in compliance with local ordinances.

Hopefully, future tenants will not suffer because the big guys in Fannie just ignore local rules.

More hopefully, there will be no such thing as governmental housing. It's a private market, and let the private owners and private investors deal with the tenants, their rights and responsibilities. That's the only way to keep it alive.

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Rainer
104,409
Bernadette A. James
Serving Sugar Land, Missouri City, Richmond and Pearland - Sugar Land, TX
Broker-Associate, Keller Williams Realty SW

Svetlana, I am so glad I saw your post as I was wondering about the new trend I was seeing with the banks renting or seller-financing foreclosed properties. I even wrote my own post asking if anyone had any experience with the scenario. 

It never even crossed my mind that my own community has the very same ordinance about the registration and inspection of rental property. Hmm... Food for thought. 

Jan 17, 2012 02:43 PM #1
Rainmaker
551,512
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Svetlana,

So let me get this straight...Fannie has an "agreement" with occupants who are/were not prior tenants, yet squatters? How did/does that happen?

Also, anyone buying a home like this would be required to get an investor loan. Not so sure this is an answer to our difficult market.

Jan 17, 2012 02:47 PM #2
Rainmaker
570,080
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Bernadette - that's the trend which is hard to ignore. Just let keep each other posted on any changes or pitfalls.

Jan 17, 2012 02:47 PM #3
Rainmaker
570,080
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Lynda - that's exactly what it is. In our case, the buyers are cash investors, so they are ok with the existing tenants, once everything is in order. However, it is not because their rental agreement is not in the compliance with local law.

I am thinking about the responsibilities of the listing agents in this situation. 

Jan 17, 2012 02:52 PM #4
Rainmaker
551,512
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi again,

Thanks for the follow up...and I'd agree about the responsibilty + added due dilligence of both agents in a situation like this.

Jan 17, 2012 03:08 PM #5
Rainmaker
1,675,919
Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

I don't think anything or almost anything the Government does saves in the long run or short run. The country is turning to socialistic like Europe and every other failed state.Just look what rent controls have down to many city areas.

Jan 17, 2012 03:17 PM #6
Rainmaker
570,080
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Lynda - our job description becomes longer and longer each year :-)

Jan 17, 2012 03:18 PM #7
Rainmaker
570,080
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Winston - I moved here from the former USSR in order to escape socialist "heaven". Voila - things started looking very familiar. Sad. Hope, free market will win.

Jan 17, 2012 03:21 PM #8
Rainmaker
596,993
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Inspected and certified for rental.....?  You've got to be kidding me.  What province of Russia do you work in?

Jan 17, 2012 03:33 PM #9
Rainmaker
570,080
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Jim - that's very funny but I work in Cleveland, Ohio. Most of our suburbs have this rule in place. Some municipalities have just a formal registration, some want to inspect rental properties. No matter, are you happy or not with these rules, they are mandatory for all landlords, no  exceptions.

Jan 17, 2012 03:36 PM #10
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Rainmaker
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Svetlana Stolyarova

Local-n-Global Realty, Broker 216-548-4663
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