Fannie Mae Announces Deed for Lease Program: A New Weapon in Our Foreclosure Defense Arsenal
As we are always trying to build our arsenal in terms of foreclosure defense strategies, we have constantly said time is on your side and that the cavalry will arrive. So here we have a new government program that may be of interest to all of us by allowing homeowners to stay in their property as a tenant as opposed to a debtor.
Fannie Mae is introducing the Deed-for-Lease Program (D4L), a program designed to minimize family displacement, deterioration of neighborhoods caused by vandalism and theft to vacant homes, and the effect these have on families, communities and home price stabilization.
Here are some of the details regarding the Deed for Lease Program:
- Must be a Fannie Mae loan.
- Cannot be eligible for a loan modification.
- Rent cannot exceed 31% of the household income.
- Provides up to a one year lease- which could possibly become a month to month lease.
- Properties that are eligible for a DIL can possibly qualify for this program. Contingent upon successful DIL.
- Both Primary Residences and Investment properties will qualify for the program.
- Subleasing is prohibited under program.
Other Requirements for Deed for Lease
- The mortgage loan is a first lien mortgage loan secured by a one- to four-unit property. All property types are eligible. Second lien mortgage loans are not eligible.
- The mortgage loan is not guaranteed or insured by a federal agency (FHA, HUD, VA, or Rural Development).
- The borrower resides in the property as a primary residence or has leased the property to a tenant who uses the property as a primary residence. Second homes or vacation homes are not eligible.
- At least three payments have been made since origination or since the last modification.
- At the time of the referral to Fannie Mae for the D4L, the borrower is not 12 or more payments past due on the mortgage loan.
- The borrower is not involved in an active bankruptcy proceeding and is not a party to litigation involving the subject property or the mortgage loan.
- Marketable title is able to be conveyed (a title insurance policy is required).
- If there are subordinate liens secured against the subject, lien releases can be obtained.
- The occupant of the property (i.e., the borrower or the borrower’s tenant) has verifiable income. Occupants with no source of income are not eligible.
- There are no zoning or homeowner’s association (HOA) rental limitations that would prohibit a D4L.