Renters can Stay is Good news for Homeowners
The unfolding mortgage crisis ushered in some good news for home sellers and renters, alike. Fannie Mae will allow paying tenants to stay in their rental homes, after a defaulting borrower’s property is foreclosed on.
The new policy brings some much needed relief to tenants, who find that they are often innocent victims of the foreclosure crisis. Landlord’s often use tenants as a revenue stream, long after they quit making mortgage payments. As a result, thousands of renters, who were unaware that their landlord was in foreclosure, have been evicted through no fault of their own.
The new policy is historic because lender’s want to get foreclosed property ready for a new buyer, as soon as possible. Typically, renters make this difficult to do. But, in this environment, thousands of homes sit vacant and fall into disrepair, because the tenant is gone and no one is buying.
This policy is a win-win for lenders and neighboring homeowners, as well. Vacant properties pull down prices and the appeal of any neighborhood, even the good ones. By leaving the paying tenant in place, the lender’s home’s are occupied and maintained, while they collect rent. Homeseller’s benefit from a stable neighborhood, and they don’t have to compete against the vacant foreclosure’s, as they try to sell their owner occupied homes.
Fannie Mae and Freddie Mac have a moratorium on foreclosures and evictions through January 9, 2009. The hold on holiday evictions has allowed 10,000 families to stay in their homes, and the new policy means that thousands of renters may escape eviction after the first of the year.
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