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WASHINGTON — Can’t pay the mortgage? You still might be able to stay in your home. Government-controlled mortgage company Fannie Mae is going to give borrowers on the verge of foreclosure the option of renting their home for a year.
The change, announced Thursday, could give a temporary break to thousands of homeowners, but critics question whether it will only add to the mushrooming losses at the company, which has received billions in taxpayer money.The new Deed for Lease program will allow homeowners to transfer title to Fannie Mae and sign a one-year lease, with potential month-to-month extensions after that. It also helps save money because the lender does not need to complete the often lengthy and time-consuming foreclosure process.The program helps "eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Jay Ryan, a Fannie Mae vice president, said in a statement.It also does less harm to the borrower’s credit record.Fannie Mae executives said the rental program is designed to help delinquent homeowners who don’t qualify for a loan modification.To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the rent, which will be established by the management company running the program. Rents are based on market rates.In the first nine months of the year, Fannie Mae took ownership of nearly 2,000 homes through a process known as a deed-in-lieu of foreclosure. That pales in comparison to the 90,000 foreclosed homes it repossessed in the period.Deed-in-lieu works like the new program, allowing homeowners to turn over title to Fannie Mae, but rather than renting, the owners simply walk away.
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