Deed for Lease program
It was well known in the real estate world that banks didn’t like to take deed-in-lieu of foreclosure from sellers in trouble. Any seller that has tried to negotiate one of these in the past two years has gone up against a brick wall.
It is well known in the real estate world that there are a lot of foreclosure. Any moderately active real estate agent here in Salem Oregon has done deals with Fannie Mae and Freddie Mac. Fannie Mae, in an effort to control the flow of its foreclosures, recently announced that they will do a Deed for Lease program.
How Deed for Lease works is that if you are a seller in trouble who doesn’t qualify for a loan modification, they will consider renting the house to you for up to one year after you deed it over to them. The fact is that Fannie can’t sell and process the houses fast enough. This way, the house is at least occupied for a while and maintained. Part of the problem for banks is the damage that is occurring to unoccupied property. Personally, I think this is one of the smarter moves that lenders have made…which isn’t saying a whole lot, let me tell you.
So…for those of you that have a Fannie Mae held loan, and you are facing foreclosure here in the Salem Oregon area. See about the Deed for Lease program. It might be the right choice for you, if you don’t feel that a short sale is what you want to do.
Related posts:
November 7th, 2009 at 12:33 am
I liked the idea at first, but came up with a few questions.
So the Govt is becoming a landlord? If someone couldn’t make mortgage payments, how will they be able to make lease payments? And how will the Landlord handle rent defaults under the Oregon tenant law?
November 8th, 2009 at 12:24 am
Ron one of the criteria is that they have to show that they can afford the rent which will be the going rate for rent. I think they said it has to be less than 31% of the rent to income ratio to qualify to rent it back.
You know, I imagine they will have property managers all over the place dealing with these rentals. I imagine the REO agents will suddenly become long term property managers, which they aren’t used to. Normally they just evict people and move on.
The deal with Deed for Lease is that the rental payment is based on the going market rent NOT the mortgage payment. I guess Fannie is taking so long to get these through the system it makes more sense to get something rather than have them sit empty.