The Foreclosure Mitigation Company

Did you do what I did when I first heard that?  That is, did you ask yourself, “Isn’t that illegal or isn’t that some scam that we’ve been told to avoid?  Give up my deed and I can stay in my home…”.

On November 5th, 2009 FANNIE MAE announced their “DEED FOR LEASE” program that allows homeowners to lease their home in exchange for their deed.

WASHINGTON, DC — Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.

So it is official, but this brings to mind a couple questions:

Does this really help you the homeowner?  It says that you can “qualify” for up to a 12 month lease with potential for a renewal.  Does this mean that it could be shorter?  Looks like FANNIE MAE is trying to stem the amount of foreclosures they are acquiring each month in addition to trying to create some revenue to stem their mounting losses.

After reviewing the announcement from FANNIE MAE & reading an article in the LA TIMES on this announcement, I just see this as a temporary band aid to a growing problem for FANNIE MAE, which is all the foreclosures that they are acquiring.  What about the tax ramifications?  Giving up their deed for a lease is very similar to a deed in lieu except that the homeowner gets to stay in their home for a period of time but versus a short sale the tax ramifications are greater for both a deed in lieu of foreclosure or a deed for lease.  So who does this really help?  The homeowner or FANNIE MAE?

Moreover, for this to work, any subordinate lien holders must release their lien.  It’s been my experience that subordinate lien holders would rather short sale and receive something than voluntarily give up their lien position for nothing.

Here is what Jay Ryan, VP of FANNIE MAE has to say about the program:

“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Vice President of Fannie Mae. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

My first initial reaction is that it doesn’t address the issue head on.   I believe short sales are the answer and until they help with streamlining their approval process with short sales FANNIE MAE, along with other lenders, will continue to acquire more properties through foreclosure.  Homeowners do not want a temporary fix where they are allowed to lease back their house where they eventually have to move anyways.  Homeowners want an immediate solution to their current problem which allows them to move on and start building a new life.

For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.

If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com