Fannie Mae to allow some troubled owners to rent back (WaPo)

[eppur_se_muova]

Fannie Mae announced a new program Thursday that will allow some homeowners facing foreclosure to hand the deed back to their lender but remain in the home as a renter.

The idea behind their new "Deed for Lease Program" is that allowing rent-backs will minimize family displacement and stanch the deterioration of neighborhoods plagued by vacant foreclosures, according to Fannie's announcement.

THE DETAILS:

The servicer has to decide that the borrower qualifies for a "deed in lieu of foreclosure." Basically, borrowers who are in default on their loan voluntarily give the deed back to the lender, negating the need for a drawn-out foreclosure process. Traditionally this has been considered less damaging to the borrower than foreclosure, although both actions have severe effects on a borrower's credit standing--and both result in loss of their home.

Borrowers-turned-tenants must be able to afford market rent on the home. That rent can't exceed 31 percent of their monthly gross income, which must be documented.
***
more: http://voices.washingtonpost.com/local-address/2009/11/fannie_mae_allowing_some_troub.html

[Duer 157099]

1. Aren't rents typically higher than mortgages?

I mean, if they can't afford the mortgage, how can they afford the rent at the same place?

[wroberts189]

2. I have always seen them lower ..especially with property taxes and insurance added on to the note nt

But that is just my experience.


on edit ...unless the owner has basically paid the mortgage off. Or owns it outright.

[orpupilofnature57]

3. Desperation on the home owners part ,Greed and no policing the same

scum that gave $400,000 dollars mortgages to people that fu*ked up on $200,000 mortgages.

[lib2DaBone]

4. Of course they want to rent back.. it's pure cash for them....

.. First.... they foreclose.

Then the bank sells the property to ANOTHER BANK for less than the original loan... thus, they get a tax-loss credit from Uncle Sam (and a loss on the loan)

So now, Bank 1, has a loss of, say $100K.... just for laughs.

Bank 1 .. now gets a deficiency judgment (in the courts) for 100K against the original owner....which it can carry on their books as an asset/receivable). Sweet....

Now.. Bank 1 sells this $300K Property for $100K (to another bank) They then pocket all the transaction fees, points, closing costs, transfer fees, etc. Then.. what do you think? There is another $200K loss on the sale. (stay with me) And you thought it couldn't get any better...

The poor unfortunate homeowner.. (now sleeping in the street) ... owes $300K on the house and they sell it at auction for $100K, the home owner is now liable to the IRS for CAPITAL GAINS on the loss of $200K! Is this great or what?

Now, Bank 1 buys back their once $300K property for $50K from Bank 2.. after the property has been stripped of its copper plumbing, windows and toilets. And what do you think? They take another tax write-off. (Sweet again...)

Finally, Bank 1 decides to sell this POS house to the general-public-vultures for $50K.. they have now netted..what: Tax credits, fees, Accounts receivable, civil judgments and a final sale price well below market value! ( netting maybe 5 times the original price of the house and their preditory loan)

Oh man.. this is so sweet.. it doesn't get any better. I wish I was Goldman Sacs.. nothing better than free money. Only the stock market is a better scam...

What's that? What about Americans families forced to sleep under bridges? Oh.. ..fuck them... too big to fail...