An amendment to Fannie Mae’s guidelines will enable seriously delinquent borrowers to hand over title to their properties and still remain in their homes.
The “Deed-for-Lease Program” was introduced today by the secondary lender in Announcement 09-33. It is immediately available on first lien mortgages owned or managed by the Washington, D.C.-based firm.
Borrowers who transfer their properties through the deed-in-lieu of foreclosure process can execute a lease for up to 12 months. In addition, tenants of investor properties can also participate in the program as long as the foreclosed investor-borrower is cooperative.
But government-insured and government-guaranteed loans are ineligible.
Pre-screened borrowers deemed by the servicers to be interested will be contacted on-site by Fannie — through its designee. Once a lease is executed, the servicer will process the deed-in-lieu.
Monthly rent payments are at market rates and cannot exceed 31 percent of the prospective tenant’s verifiable gross income. Borrowers must have made at least three payments either since origination or since the last modification and cannot be delinquent 12 or more months.
Subordinate liens must be released.
Fannie said that the program will reduce vandalism and theft that vacant homes face. The program requires an inspection to confirm that the occupants have been keeping the property in good condition.
The program is likely to improve marketability among investors of real-estate-owned properties because tenants actively occupy the homes and make the lease payments.
read full Announcement 09-33
