By JLP | November 6, 2009
Fannie Mae is becoming a landlord…
Fannie Mae will allow homeowners facing foreclosure to stay in their homes and rent them for as long as a year, as part of the government’s latest effort to help troubled borrowers, while keeping more foreclosed properties from hitting the housing market.
The “Deed for Lease” Program lets borrowers who don’t qualify for loan modifications transfer their property to Fannie Mae in exchange for a lease. Borrowers-turned-tenants will pay market rents, which in most cases are lower than the cost of mortgage payments, and might be offered extensions when their leases expire.
That’s what I read in today’s WSJ. You can read the article here.
The supposed goals of this program are to:
1. Allow people to stay in their homes by giving them rent payments that are lower than their mortgage payments.
2. Keep foreclosed houses from flooding the housing market with excess inventory.
3. Possibly allow Fannie to profit from the eventual sale of the homes when the real estate market recovers.
Fannie will hire a professional management company to handle all the rental details.
Basically, what this means is that since our government essentially owns Fannie Mae, our government is now a landlord. So much for property rights. Kinda scary if you ask me.
What do I think should happen?
Allow the market to address the housing situation instead of artificially propping it up until who knows when. Attack the situation like you do when ripping off a bandaid…one quick motion.