Fannie Renter
Earlier this week we got the news that Fannie Mae has instituted the “Deed for Lease” Program. This is a great innovation that may make the “transition” from homeownership to rentership easier for families.
The Program allows borrowers to transfer their property back to the lender in a Deed-in-Lieu, then lease back the house at market rate. The lease period is for up to 12 months, with possible month-to-month contract extensions after that period. The program is designed for borrowers who do not qualify for or have not been able to obtain other loan-workout solutions, such as a loan modification.
The Program carries over some of the MHA stipulations that it be your primary residence and that the rental payments will be no more than 31% of your household gross income. Tenants of borrowers in this circumstance also may be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31 percent of their gross income.
Let’s see, I’m upside-down with an $725K mortgage… even with a low rate, here in Torrance rent is about $2,300 and payments are about $4,900. There’s likely no appreciation on the horizon. I’m lookin’ into this one!
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