Fannie Mae to Help Renters Stay in Foreclosed Homes

Fannie Mae has indicated that it intents to help renters stay in homes when the landlord goes into foreclosure. Instead of automatically evicting tenants, as it currently does, Fannie Mae appears willing to allow existing tenants to stay in the homes and pay rent to Fannie Mae as the new landlord. The stay of eviction only applies to homes owned or guaranteed by Fannie Mae.

Details of the new plan to help tenants are unclear but this is clearly not a blanket proposal to cover all properties owned or guaranteed by Fannie Mae. At a minimum the tenant must be able to meet the rent payments. 

The latest proposal follows Fannie Mae’s decision to halt all evictions for the holiday period through January 9, 2009. 

It’s a worthy sentiment but like most proposals it’s doomed to fail due to the administrative nightmare it will create for Fannie Mae. It’s almost impossible for Fannie Mae to identify and qualify tenants who will meet the program guidelines. It will also force Fannie Mae to enter the property management business – for which it has neither the expertise nor workforce. 

By holding rental properties on its balance sheet, Fannie Mae will be face even greater liquidity problems at a time when it has already been forced to go cap in hand to the Treasury for a substantial cash infusion. 

About Ross Hair 

Ross Hair is the Real Estate Advocate and President of the Real Estate Investment Association