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New Fannie Mae Policy Will Halt Evictions Of Those Renting Foreclosed Homes
January 14th, 2009 categories: Foreclosures / Short Sales
Fannie Mae will no longer evict renters who are living in properties that are foreclosed upon, 
but will instead offer them new market-rate leases on a month-to-month basis, under its new National Real Estate Owned Rental Policy, which was just announced.
Up until now, renters of homes that have gone into foreclosure have often been the most unfortunate victims of the current real estate saga. In many cases, they keep paying their rent month after month, completely unaware that the landlord is in default.
Often, the first time they realize the owner is about to lose the house is when a process server posts a notice of sale at the property. All of a sudden they need to look for a new place to live and usually in a big hurry, too.
Many lenders typically offer a cash incentive to encourage renters to leave right away and then start eviction proceedings, in order to get the home ready to be sold to a new owner. Fannie’s new renter’s policy, though, allows tenants to stay in the property, even while it is being marketed for sale, on a month-to-month basis.
They’ll write a new lease at market-rate rents, but won’t require a security deposit. For those who would rather move out altogether, Fannie will provide financial assistance to help them transition into another property, according to Fannie Mae’s press release.
In late November, Fannie Mae announced it was suspending evictions through the holidays. That policy was originally set to expire Jan. 9, but was recently extended until the end of this month, in conjunction with Fannie’s decision to halt new foreclosures until the end of January.
The new rental policy will eliminate evictions permanently for eligible renters. For a Fannie Mae’s FAQs on the new policy, click here. Keep in mind that this policy currently ONLY AFFECTS FANNIE MAE FORECLOSURES. It’s possible, though, that other lenders, particularly Freddie Mac, may soon follow suit.
