Fannie Mae is doing its part to cut down on RENT TO OWN schemes. Any investor purchaser will be required to agree to the following:
Effective Tuesday, May 23, all new offer negotiations must include the verbiage below in Section 38 of the Real Estate Purchase Addendum if the buyer type is a non-owner occupant. Any negotiations that began prior to May 23 are exempt.
"Purchaser further agrees that it will not enter into any contract for deed or lease with option to purchase agreements regarding the Property, unless Purchaser is a non-profit organization or has obtained Fannie Mae’s prior written consent. Purchaser acknowledges that, in addition to any other remedy available to Fannie Mae, any violation of this agreement may result in Fannie Mae refusing to sell additional REO properties to Purchaser and/or its affiliates."
I am sorry to see Fannie Mae having to make this move, because I know that there are a few good eggs in the world who do good things with contracts for deed. I also know, however, that most "rent to own" arrangements border on fraud (if not being outright fraud).
My late father-in-law sold a number of houses privately (before I went into real estate) to people he knew using the contract for deed method, and most of them ultimately closed. He encouraged and helped his buyers, most of whom were farm laborers, to obtain financing from local lenders after they had enough equity in the homes. Of course, the difference was that he never had any intent to defraud his buyers. On the contrary, he was making an investment in--and taking a risk for--people he knew.