In spite of all the good intentions that the Banks and the Obama Administration had in mind when they initiated the Making Home Affordable loan modification program to stop foreclosure for home borrowers that were facing foreclosures
Not so fast! Fannie Mae have come up with another option for slowing foreclosures, “Deed for Lease™ Program”. The Deed for Lease program announced by Fannie Mae in November, is a program designed to offer up another option for borrowers facing foreclosure who do not qualify for other stop foreclosure programs like loan modifications. The way it works is that qualifying homeowners facing foreclosure may be able to stay in their homes if they sign a lease and at the same time, voluntarily transfer the deed of the property back to the lender, also called “deed in lieu of foreclosure”. The primary aim of the Deed for Lease program is to help alleviate the problems associated with foreclosure, such as uprooting families, decaying neighborhoods and other harddships caused by foreclosures. According to the Vice President of Fannie Mae, Jay Ryan, Deed for Lease is another option for troubled borrowers facing foreclosures;
The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications. 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.
A few of the general requirements to participate in the Deed for Lease program as follows,
- borrowers must live in the home as their primary residence
- borrower must be released from subordinate liens, i.e. second Trust Deeds etc…
- documented proof that new rental rate is less than 31% of gross income
Leases can be up to 12 months, with the possibility at the end of that term, month-to-month extensions may be arranged. According to Fannie Mae, “A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer“, which means you may get a new owner of the property. A new owner, who knows, could go in a good way or a bad way, so be sure to ask as many questions about the program. For more information about the Deed For Lease program, please click here to read the announcement of the program by Fannie Mae.
Under this new program, tenants of borrowers facing foreclosure may also participate which is a drastic change from previous programs where many tenants of borrowers in foreclosure had no recourse but eviction.
For details and information on how to qualify for the Deed For Lease program and other programs, please click here to visit the Fannie Mae site.
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