Servicing/Default
Fannie Pushes Rental Alternative to Foreclosure
By
DIANA GOLOBAY
November 5, 2009 4:47 PM CST
Mortgage giant Fannie Mae (FNM: 1.02 -0.97%) released details Thursday of a deed-for-lease program designed to offer borrowers an alternative to foreclosure.
The Deed-for-Lease (D4L) Program aims to minimize neighborhood blight and encourage house price stabilization by cutting down on foreclosures, real estate-owned (REO) and vacant properties, and distressed home sales.
Beginning immediately with the announcement of the program, servicers of Fannie mortgages are expected to follow regular procedures in considering whether borrowers qualify for a deed-in-lieu of foreclosure. At that time, servicers will notify Fannie that the borrower may also qualify for the D4L program.
Once Fannie or its designee verifies property and borrower eligibility, the rental rate will be determined and the lease agreement executed. The property’s occupant must be able to pay market rent within 31% of monthly gross income, and the lease agreement will not be completed unless the deed-in-lieu is successfully completed.
The program applies to first liens secured by a one- to four-unity property.
Write to Diana Golobay.
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