A guest post from Frank Shump. Frank is a veteran from the financial services industry, and currently authors a blog called Thefinancecastle.com, which documents his thoughts on money matters and his adventures in self employment.
As we prepare for the Fed to lower rates to an all time low and more consumer hitting the daunting certainty of foreclosure and bankruptcy, it’s easy to forget about the even littler guy in the housing picture, the renter. As I mentioned in a previous post, renters have been feeling their share of pain in this market, too. Many landlords, either overwhelmed and taking what they can or simply abandoning their properties altogether, have left many renters out in the cold. Despite continuing to bleed, it appears that the government controlled mortgage giant, Fannie Mae, may have a soft spot for us consumers after all (well, now that they’re done loading up risk to their eyeballs and paying the price). They’ve officially launched efforts to help renters stay in their homes, even if the property they’re renting heads into foreclosure.
The move, according to Fannie, will allow tenants to sign new leases, and should affect about 4,000 renters that are staying in properties that have hit foreclosure. This is definitely a positive development, considering that the renters have been dutifully paying their rent but still would face eviction without help. The policy is expected to go into place on January 9, according to Brian Faith, a Fannie spokesperson. I’d expect Freddie Mac will follow suit on those efforts as well. Both of them have agreed to temporarily hold evictions.
Of course it wasn’t exactly compassion that moved Fannie to action. An advocacy group, the New Haven Legal Assistance Association recently accused the company of obeying Federal requirements to let renters stay in properties that have hit foreclosure. As part of the bailout, Both Fannie and Freddie are required to allow tenants to stay ?where permissible? in their homes. I guess that was open to interpretation until now.
I suppose it’ll be somewhat comforting to renters to know no matter what happens they’ll have a chance to stay where they are. If the Fed rate cut goes through and credit remains tight..we’ll all be renting soon enough, anyway.
Last 3 posts by Morgan
- Subprime Bananas - June 28th, 2009
- Roubini: No confidence in government exit strategy - June 24th, 2009
- Goldman bonuses largest in firm's 140-year history - June 21st, 2009
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