Fannie Mae to help renters stay
Fannie Mae is developing a policy to allow renters who live in foreclosed properties to stay in their homes and avoid eviction. The new policy comes on the heels of the mortgage finance company's current holiday eviction moratorium. Sam Eaton reports.
The Fannie Mae building in Washington, D.C. (Alex Wong/Getty Images)
More on Housing - Real Estate
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TESS VIGELAND: Mortgage finance giant Fannie Mae is bringing relief to what you might call unseen victims of the housing mess. The renters who found themselves living in houses or apartments that went into foreclosure. Thousand of renters have been evicted through no fault of their own. And now, come January 9th, they may be getting some relief. The plan would piggyback onto the current holiday eviction moratorium.
Marketplace's Sam Eaton reports.
SAM EATON: In the unfolding mortgage crisis drama, the main protagonists are often portrayed as the millions of homeowners facing potential foreclosure. But Amy Marx with New Haven Legal Assistance in Connecticut says those homeowners are miscast.
Amy Marx: Renters are really the innocent victims of the foreclosure crisis.
That's because during the housing boom renters were often used as temporary income streams, while the owners played the real estate market. Now as those investors face foreclosure, their tenants are often the last to hear about it. And when they do, Marx says it's usually in the form of an eviction notice -- even with Fannie Mae's holiday moratorium.
AMY MARX: We were working with multiple tenants who had never been contacted in advance of the eviction or even notified during the eviction that there was ever a possibility for them to stay.
Marx says Fannie Mae's new policy will set the stage for Freddie Mac, and even state legislatures to mandate the same rights. Fannie Mae says its hold on holiday evictions alone has helped keep as many as 10,000 families in their homes. And they're just the tip of the iceberg, which has some real estate experts predicting the new policy could actually make the problem worse, not better.
Karl Case is a real estate economist at Wellesley College.
Karl Case: You want to get the properties ready for a new owner to come in and buy it, fix it up and put it back in the rental market. And to the extent that tenants make it difficult to do that it's a problem.
So long as you can sell those homes in the first place. Case says the irony is that many of these houses are vacated only to fall into a state of disrepair as they sit on the market with no buyers in sight.
I'm Sam Eaton for Marketplace.
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From Venice, CA, 12/20/2008
If the building is already occupied by tenants who pay their rent properly, why would a new owner have to take the building out of the market to fix it up to put it back into the market?
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