Foreclosure help Fannie Mae style

Written by: George Haughton

Foreclosure help will come from unlikely source, Fannie Mae. In fact Fannie Mae now joins Freddie Mac in offering a deed for lease program. Therefore, those facing foreclosure have the option to rent their homes back for a period of time until they get their finances in order. This deed for lease allows the homeowner who failed to qualify for or cannot maintain a loan modification to transfer their deed or their interest in the home to Fannie Mae.

This process is really a deed in lieu of foreclosure,it does not show up on your credit report has a foreclosure. Foreclosure on your credit record prevents you from purchasing another house for at least three years with FHA and five years for conventional loans. Therefore, this program allows a homeowner to pay rent equal to the documented 31% of their monthly income pretax or gross income.

That is welcomed news for the close to one million homeowners who were served foreclosure notices last month. The estimate is that over 18.8 million houses stand empty in the third quarter, which has created a value and vandalism problem.

Therefore, we can say finally the lenders are really looking at the bigger picture. For example in Detroit that city has started to knock down empty blocks of houses and do not have any plans to replace these houses any time soon. Therefore, it makes total business sense to keep the homeowners in these homes and work it out.

This deed for lease does come with out some qualifying guidelines so you might want to look these up before you assume you qualify. For example it must be your primary home you live in. Fannie Mae or Freddie Mac don’t actually make loans to consumers so this foreclosure help is a quick measure to legally keeping homeowners in place, but again what are the guidelines and how long is this period.

Based on what I have read the guaranteed lease period is for one year and month to month after that. This action will ease the minds of many homeowners fighting foreclosure and help keep the neighborhood more stabilize. The truth a lot of these homes have become very hazardous and dangerous. In the state of California some communities speak about pools that are a breading ground for mosquitoes.

Freddie Mac unlike Fannie Mae rental lease is for a month to month.Therefore, what Fannie Mae has done is taken the big uncertainty out of the minds of the homeowners for at least a year. Some are now asking the question is a postponement of the inevitable?

Well the economy is said to be improving. However, some experts who follow the housing issue think the second wave of foreclosures is still in front of us. Therefore, creating an option like “deed for lease” might be an attempt to cushion the blow. This foreclosure help by deed for lease really is the answer for those facing foreclosures now and yet to come?