In an effort to help more homeowners stay in their homes and stabilize communities across America, Fannie Mae is getting into the Landlord business.
Qualified homeowners (with mortgages backed by Fannie Mae Loans), can sign away all the interest in their home and enter into a 1-year-lease with fixed payments. The homeowner can stay in their home for the entire term of the lease, afterwhich the lease goes month-to-month at which point experts expect Fannie May may begin to sell these homes. The program is aimed at those who cannot afford or sustain a loan modification according to CNN Money.
I don’t think I’m alone when I say: I believe this will ultimatly delay the sale of a distressed property into the future, and homeowners, will be signing away valuable equity and stability that may only be 1-2 years away from stabilizing.
I also have other concerns:
- How can Fannie May possibly manage all of this inventory. There are 50 states with differing Landlord Tenant Acts. My thought is they will work similarly with Property Managers as they do with Agents who sell their REO properties. Giving large pools of rental units to Property Management Agencies.
- What about routine maintenance and homes that do not already meet minimum standards as set by local Landlord Tenant laws?
- What happens after a year and the tenant is month to month. Perhaps even the market has stabilized and Fannie Mae can turn a profit on the home, or sell it at par rate with relative ease?
From a business standpoint for Fanine Mae – I think it’s a brilliant idea and with a little elbow grease, it’ll be wildly successful. From a standpoint of Increasing Home Ownership –> one of the fundamentals of the Home Buyer Tax Credit, this does not help that effort.
Home ownership is highly important. We need to find ways to keep people in their own homes.