WSJ: Fannie to Rent to Owners in Foreclosure

Posted on November 5, 2009

Who’s your landlord?  Well, if you’re being foreclosed on, Fannie Mae now wants to cover your house and rent it back to you!   From the Wall Street Journal:

Fannie Mae will allow homeowners facing foreclosure to stay in their homes and rent them for as long as a year, as part of the government’s latest effort to help troubled borrowers, while keeping more foreclosed properties from hitting the housing market.

The “Deed for Lease” Program lets borrowers who don’t qualify for loan modifications transfer their property to Fannie Mae in exchange for a lease. Borrowers-turned-tenants will pay market rents, which in most cases are lower than the cost of mortgage payments, and might be offered extensions when their leases expire.

So you get to rent your own home for less than your mortgage and you don’t even have to move.  Then, after a year, you might be granted an extension to stay. 

Of course, if the government is in the renting business, then they will be hiring management companies to take care of the landscaping, plumbing, and any emergency that might arise.   All in the hopes of the market eventually swinging up so that the government can eventually sell the house off and make their money back plus.

Although it keeps lots of houses off of the market, how long is the government willing to do this?  Housing markets aren’t supposed to get back to the high levels we saw for quite a few years to come regardless of how far along the “recovery” is now.   This just establishes more government-subsidized housing.  Government to the “rescue” for a problem they created.

Posted in: Economy