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Homeowner Facing Foreclosure Wants To Stay:

Scales of Justice

There are possibilities for staying in the home as a renter if you are the homeowner going through Foreclosure, and have been living in the home as a primary residence, especially if you have a Fannie Mae mortgage.

* Inside scoop: Fannie Mae released a press statement in early March 2010 that it expected to continue to purchase seriously delinquent loans including ARMs in an effort to correct the market. They have kept their word and now control a large percentage of these loans. So even if you didn't start with a Fannie Mae home, you may have one now! You may want to use Fannie Mae's "Loan Lookup" tool to find out.

* Notice: Fannie Mae has recently announced it has renamed the deed-in-lieu of foreclosure process as a 'mortgage release' and is using that term throughout the new servicing guidebook.

Losing my Fannie Mae home due to Foreclosure:

Deed-for-Lease

Fannie Mae's Deed-for-Lease Program (D4L), allows qualified borrowers (or their tenants) to execute a lease of up to 12 months in conjunction with their deed-in-lieu of foreclosure, allowing them to remain in their home as a renter. Borrowers interested in exploring this option should discuss it with their mortgage servicer. To qualify both the property and borrower (or tenant of the borrower) must meet certain general qualifications* such as:

Occupant Eligibility:

  • Income is sufficient to cover rental payments of not more than 31 percent of gross income. If the current market rent is greater than 31 percent of the occupant's monthly gross income, a lease will not be offered.
  • Inspection of the property indicates that the occupants have been keeping the property in good condition.
  • The number of occupants is appropriate for the home and in compliance with local laws and homeowner association rules.
  • If pets are present, renter's insurance is obtained, if required.
  • The occupants signing the lease must agree to a credit review and all occupants over the age of 18 must have an acceptable background check, including receiving clearance from the Office of Foreign Assets Control ("OFAC").
  • There are no signs or reports of illegal activities conducted at the property.
  • The property is to be used as a primary residence.

Property Eligibility:

  • There are no zoning or homeowner's association (HOA) rental limitations that would prohibit a lease.
  • Repairs required to make the property habitable are deemed to be in an acceptable amount based on the property value.
  • The property is in compliance with local rules and laws or can be brought into compliance within 30 days.
  • The property is not within a target area for any corporate, government or community neighborhood stabilization plan which may need the property as part of the plan for purposes other than residential.
  • The market rental income is anticipated to cover ongoing maintenance and management costs.
* This list does not include all conditions, which may vary by location.

For answers to frequently asked questions please see Deed for Lease (D4L) - Frequently Asked Questions.

Please note that consideration for a D4L is initiated by mortgage servicers. If you are a borrower interested in pursuing a D4L please contact your mortgage servicer. Servicers can find additional information at www.efanniemae.com/sf/servicing/d4l/.

* Notice: Fannie Mae has recently announced it has renamed the deed-in-lieu of foreclosure process as a 'mortgage release' and is using that term throughout the new servicing guidebook.

The government-sponsored enterprise said servicers are required to implement the policies for all loans under consideration for mortgage release on or after March 1, 2013.

The general rule of thumb is that if it doesn't seem fair to you, someone has probably already gone through the very same thing; so there may be either a law or a precedent already established in your favor.

What if I don't have a Fannie Mae home?

Many of today's mortgage servicers, including most major banks, have adopted their own "Foreclosure Alternatives" that include "Deed For Lease" terms, sometimes referred to as "Cash for Keys," that also allow you to stay in your home for an extended time ... but not indefinitely, so that you can save up some transition money.

For a lot more information on these "Deed For Lease" programs, go here!

For other options please refer to our Options Page.

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