In a show of support for home renters facing eviction because of landlord defaults, government-sponsored loan giant Fannie Mae said yesterday that it would begin the process of formulating new leases with renters living in foreclosed properties. These foreclosed homes, backed by Fannie Mae, will be covered under new leases that will allow renters to continue paying rent on a month-to-month basis until the property is resold.
Property foreclosure results when the owner of a given home, the landlord, is unable to meet his/her payments, at which point the property is transferred to the mortgage backer (Fannie Mae, or another loan offerer), which generally forces the tenants out, regardless of their willingness to continue paying rent. A bottoming out of home prices in early 2008 forced many such foreclosures, with Fannie Mae owning 67,500 foreclosed homes by the end of September this year.
The move to allow renters to remain living in their foreclosed properties represents the first national effort to provide specific relief to renters who have been trapped in the mortgage crisis. Fannie Mae, once solely responsible for the mechanics of its mortgage structures, now becomes a sort of mass landlord.
Fannie Mae, with its government network, is the first institution to make such an offer to renters of foreclosed properties, but other private mortgage providers may be making similar moves in the coming months. “It’s really good news that Fannie Mae is doing this,” said John Taylor, president of the National Community Reinvestment Coalition. “Now the question is whether [the] private sector will follow suit.”