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.
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.
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.