Giving ‘Deed for Lease’ A Second Look
by Tim Manni
Chris Thorman at www.SoftwareAdvice.com has written a great post on Fannie Mae’s recently-announced Deed for Lease (D4L) program that complements our previous post on the subject very well.
Thorman’s article does a good job at breaking down D4L using easy-to-understand language. “Own to Rent: Breaking Down Fannie Mae’s Deed for Lease Program,” covers how the program works, who is eligible, property requirements, as well as examines whether or not it makes financially to take advantage of the program.
Here’s an excerpt from Chris’s article:
How much immediate relief can someone who enters the D4L program expect to get by renting?
Here’s our methodology for calculating how much a borrower could potentially save each month by agreeing to the D4L program:
- The length of the loan is 30 years;
- The APR is a 6.18%, the December 2006 average from Fannie Mae;
- The median home price for the metro areas is based on the National Association of Realtors’ 2006 single family home report;
- The monthly mortgage amount was calculated using HSH.com; and,
- The average rental rate comes from Zilpy.com.
As you can see, every household would hypothetically save money each month by trading in the deed to their property and renting it out.
Yes, they still have to give up their property to Fannie Mae and lose the equity in their home. But they wouldn’t have to move during an undoubtedly rough transitional period and would avoid hefty security deposits if they were to move to a new rental unit. It’s a desirable solution relative to immediately foreclosing on a home and having to search for a new place to live.
Click here to read Chris’s article in its entirety.
