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Fannie Mae Announces Plans to Lease Homes Back to Foreclosed Homeowners

November 12, 2009

As Chino loan modification attorneys, we know it's a sad truth that not everyone is eligible for a loan workout. People facing foreclosure because of a job loss, for example, are unlikely to qualify because they simply don't have the income to make payments unless they can be re-employed quickly. Nonetheless, with unemployment at record highs, both homeowners and the housing market itself may be in serious trouble if this situation creates another wave of foreclosures that leaves families homeless and housing prices low. So we were pleased to see an announcement in the Los Angeles Times Nov. 6 that Fannie Mae, the government-associated mortgage buyer, is planning a "deed for lease" program that allows foreclosed homeowners to stay in their homes as renters.

According to the Times, the program is open to borrowers who are facing foreclosure but cannot qualify for a loan modification. The home must be the borrower's primary residence and any subordinate liens on the property would have to be removed. Homeowners would sign over all interest in the homes to Fannie Mae. In exchange, they would pay market-rate rent that is no more than 31% of their gross income. A Fannie Mae spokesman said this would ease the transition to renting, leaving school and community ties in place. It would also allow Fannie Mae to make some money off properties that are "underwater," meaning that it cannot sell them for the balance of the loan anyway, at least right now. Converting borrowers to renters keeps the properties in good condition until the market improves.

Our San Dimas loan modification lawyers are pleased to see the government-related agencies addressing this problem head-on. We, and many of our clients, have already learned through experience and numerous media reports that jobless borrowers don't have many options with completely private lenders. This solution won't allow borrowers to save their homes, but it does offer advantages for the borrower, Fannie Mae and the market as a whole. Borrowers get time to transition into a rental, while Fannie Mae gets some rental income -- and the possibility of keeping properties in good condition for sale in the future, when the market may be better. And of course, communities have fewer foreclosed properties around to create eyesores and lower property values.

Howard Law LLP has an active practice helping clients win substantial, sustainable changes to their loans. We understand what our clients are up against when they try to modify loans directly through the lender -- bureaucracy, lost paperwork, ours on hold -- because we hear their stories all the time. Our Buena Park loan modification attorneys believe we can cut through that red tape and get the lender's attention faster because we are attorneys. When homeowners hire lawyers, banks understand that they mean business. In fact, whenever appropriate, we will file lawsuits against banks to stop unfair foreclosures or force them to seriously consider clients' applications. Our goal is to keep as many clients in their homes as possible, at a reasonable, achievable monthly payment.

If you're facing default or foreclosure on your home and you're having trouble getting your bank to consider a loan workout, don't hesitate to call Howard Law. To set up a free, confidential evaluation of your case, please call us toll-free at 1-800-872-5925 or contact us through our Web site.