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Foreclosed owners to stay as tenants

By
Real Estate Agent with HomeSmart International

Here is an interesting new program.  Fannie Mae and Freddie Mac will allow foreclosed homeowners to stay in their homes as renters.

More information here: http://www.commondreams.org/newswire/2009/02/02-5

That is one thing I have always admired about americans ....our creativity, and the ability to implement new solutions rapidly....and I do mean this ...it keeps my hope alive.

A few years ago I tried unsuccesfully to take up Golfing.  I took a couple of lessons to try to improve my swing.  The sport was not for me and I soon gave it up.

But the one thing I remember was the instructor telling me ..."you have great aim and are hitting the ball right ..... you need however, to follow thru on your swing"........excellent advise!!

Staying in your foreclosed home and paying rent is an excellent alternative to moving in with friends or relatives, being homeless or living out of your car.

Fannie Mae and Freddy Mac seem to be hitting the ball right, but where is the "follow thru"?

If Fannie Mae and Freddy Mac trust that the foreclosed person will take care of the house and pay the rent every month, why not adjust their loan or refinance them into a loan with monthly payments equal to the rent they will be paying?

The foreclosed owners are already invested in the home, they probably have pride of ownership and their situation may be temporaty due to a lay-off or something similar.....so if they can stay there as renters, why couldn't they stay there as owners? .....besides, the banks would not have to become landlords.

Maybe ist's just a temporary situation while they sell the house to an investor.....who knows....

I don't know the details and I don't know the answer ......but it's something to think about.

Pangaea Interior Design Kitchen & Bath Design, Remodeling
Portland Oregon - Portland, OR

I'm with you. It would make sense that the bank would want to adjust the loan to get through a situation that is likely temporary to keep people who care about the property. It would be a win-win scenario. I think we need to write to Obama about these things. Seems like he is looking for creative solutions to stem the tide of foreclosures.

Feb 03, 2009 02:42 AM
David Width Jr.
Little Egg Harbor, NJ

I hope they start adjusting these loans and their rates, either bringing down the total loan amount, or lowering the interest rate. They need to do one of the following and do it soon. The quicker the better is the case in this scenario.

Feb 03, 2009 02:46 AM
Mike Saunders
Retired - Athens, GA

Federico - it the rents are similar to, or higher than, the house payments, the renter will probably not be able to make the payments for rent, either. The corporate owner may consider holding the property, while getting some income, until it increases in value. Just playing devil's advocate.

However, I thought one of the primary purposes of this policy was to allow current renters to remain in property that was foreclosed upon from the landlords.

Feb 03, 2009 04:52 AM
Federico Astiz
HomeSmart International - Tucson, AZ

I see your point, and you may be right, but I think the program is for owner-occupied rather than investment property.

Feb 03, 2009 05:11 AM