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Welcome to the Brettin Law Office bloG, an occasional source of news, opinion, and viewpoint of the author on topics specific to current business and law interests. Posts are intermittent as time permits. These BLOG posts are to be read as commentary, not legal opinion, and do not form the basis of a lawyer-client relationship. Please call 206-522-7100 if you have questions about any BLOG post content, or if you would like to speak with a lawyer on a topic appearing in the BLOG. Thank you . Lee November 11, 2009
You’ve heard of rent-to-own and you’ve heard of deed in lieu of foreclosure. Well, now we have own-to-rent, a program intended to help thousands of homeowners stay in their homes rather than losing them to foreclosure. Here’s the press release from Fannie Mae: WASHINGTON, DC — Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender. “The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Vice President of Fannie Mae. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.” The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate. 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 may also 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% of their gross income. Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer. The program will attract only a small percentage of qualified troubled homeowners. Considering number of qualifying home owners compared to the number of upside down loans, pre- and current-foreclosures, and future rate readjusts, not sure it’s going to make a big dent in the problem. The argument for the plan being, hold off on a foreclosure sale until the market recovers then sell for a higher price point. Critics believe this action only postpones the pain at tax payer expense. Another sign the recession is not over for everybody. |
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* Grizette = grist-gazette. The BLOG, and other content of this website, is not legal advice, please do not view it as such. The BLOG posts do not form the basis of an attorney-client relationship, actual or implied.
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