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December 15th, 2008 (Modified on December 30th, 2009)

Good News for Renters

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Fannie Mae agreed yesterday to become a “national landlord,” by supporting the first initiative designed to rescue renters facing eviction all across the country. The mortgage giant will sign month-to-month leases for tenants who live in Fannie-owned, foreclosed properties.

Supporters praised the GSE for aiding renters who have continually held up their end of the bargain against landlords who have not. Fannie expects the program to initially help 4,000 renters. According to analysts, approximately 70,000 renters faced eviction in recent months, despite keeping up with monthly payments.

Fannie’s new agreement will likely only benefit the fraction of renters who live in Fannie-owned properties. Can this program entice private banks to follow suit?

“We’re not in the business of managing rental properties, and we’re not in the business of being a landlord,” said Thomas Kelly, a spokesman for JPMorgan Chase, which owns about two million loans. “Clearly the renter is caught in the middle in cases like this. When a property is in foreclosure, we follow the law.”

Some argue that the landscape of the housing has clearly changed, and banks need to adjust:

“If your loan is owned by Fannie Mae, you get to stay in your home. If your loan is owned by someone else, you’re on the street,” said Mr. Taylor of the National Community Reinvestment Coalition. “These banks need to realize they’re in the property management business now, whether they like it or not.”

Since the details of the program are still being ironed out, we don’t yet know how much this initiative will cost Fannie, or just how involved they will be as the actual landlord. Will James Lockhart or another member of the FHFA staff return your call when you complain the toilet is backed up or the roof is leaking? According to the New York Times, a Fannie spokesperson said the GSE would even pay for the tenant to move if they didn’t wish to remain in the foreclosed property. The FHFA expects Freddie to update their policy on renters soon enough.

Parting Questions: Should responsibility fall upon the government to save renters? Are renters at all responsible when their occupied residence is foreclosed?

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2 Responses to “Good News for Renters”

  1. Belinda MacDonald Says: May 12th, 2010 at 1:53 pm

    Do you either own properties in Ontario, Canada or know of a program in Canada that is similar to yours? I am so very desperate for help, my daughter and my 10 month old grandson live with me and as of May 16, 2010 we are going to be homeless because the landlord reported the back rent owing plus extras on my credit record so no one will rent to me and my daughter doesn’t have enough income on her own to get a place for the 3 of us or even just the 2 of them. Any advice given would be extremely appreciated!

  2. Tim Manni Says: May 12th, 2010 at 4:34 pm

    Belinda,

    Unfortunately I’m not aware of any. If I find some I will surely pass them along.

    Best of luck,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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