Today, mortgage giants Fannie Mae and Freddie Mac announced they will extend their suspension of foreclosure evictions through February 28. Freddie Mac also announced a plan to help those living in foreclosed home rent the homes back.
The rental program announced today by Freddie Mac aims to allow owner-occupants and renters of foreclosed homes to stay in their homes. As stated in Freddie Mac's press release, owner-occupants of foreclosed homes with Freddie Mac owned mortgages will have the opportunity to rent their home back at market rate. Market rate will be set by a property management firm with whom Freddie Mac has contracted for the program. Renters in foreclosed homes with Freddie Mac owned mortgages will have to opportunity to re-rent the homes at market rate or the rate they were last paying, whichever is less.
The leases will be month-to-month. To qualify, participants will need to prove their ability to pay the rental amount and the homes will need to be up to housing codes.
As reported by the New York Times, Fannie Mae began a program for renters of foreclosed homes back in December.
Both Freddie Mac and Fannie Mae extended, through February 28, 2009, their halt on foreclosure evictions for single family properties with mortgages owned by the respective mortgage giants. As reported by WSJ's Market Watch, this is the third extension of the eviction suspension program, which began November 26, 2008.
Although both Fannie Mae and Freddie Mac have suspended foreclosure evictions, they have not stopped filing new foreclosures. Bloomberg reports that according to Brad German at Freddie Mac and Brian Faith at Fannie Mae, both are in fact still initiating new evictions proceedings, and have simply suspended taking the final step of locking people out of their homes.
Freddie Mac also expressed in its press release the desire to explore mortgage workout options with distressed homeowners. Ingrid Beckles, Senior Vice President of Default Asset Management at Freddie Mac stated that "[i]n about half of all foreclosure sales there is no conversation between the borrower and the mortgage servicer about workouts. Before starting the eviction process, we want to ensure there is one last effort to achieve a workout."