Renters Get Reprieve in Fannie Mae Foreclosures

Fannie Mae has announced a new policy that will allow some renters in properties foreclosed by the corporation to remain in their homes.

The eviction, sometime with little advance notice, of renters from foreclosed properties has become a major issue in the current crisis.  Some states have enacted restrictions on evictions and a few local law enforcement agencies have refused to carry out evictions of tenants who were current on their rent and may not have even been aware that their landlord was in foreclosure.

Fannie Mae's new policy - the National Real Estate Owned (REO) Rental Policy - comes even as Fannie is operating under a temporary suspension of evictions due to expire at the end of the month.  Fannie Mae stresses that this suspension will not end until the new policy is fully in force.

The new policy will apply to renters in single-and multi-family homes, condos, co-ops and manufactured houses who are in place when Fannie Mae acquires the property.  These tenants will be offered a new month-to-month lease which will require them to pay market rate rent but they will not have to post security deposits.  If the renter chooses to vacate the property instead, Fannie Mae will offer financial assistance for their move to other housing.

The foreclosed home must meet state laws and local codes in order to be eligible for the program.

"Renters in foreclosed properties have often been a casualty of the foreclosure crisis the country is facing," said Michael Williams, chief operating officer of Fannie Mae.  "This policy will allow qualified renters to remain in Fannie Mae-owned properties should they choose to do so, mitigate the disruption of personal lives that foreclosures can cause, and help bring a measure of stability to communities impacted by high foreclosure rates."