Fannie and Freddie: Control Evictions Due to Foreclosures
When Fannie Mae and Freddie Mac have been nationalized in September, they have been transformed into housing-aid agencies. They have already frozen a lot of foreclosures last year and this year, they are pioneering programs that would let borrowers rent their own properties after default.
Even the renters who are up-to-date in their monthly rental payments are being forced out of their homes without them knowing that the house they are occupying have gone into foreclosure.
But the two housing financing companies continue their efforts in preventing such evictions. In fact, around mid-January, Fannie has suspended 20,000 foreclosures and about 6300 evictions. This suspension of eviction has been extended by both companies through February 28.
One of Fannie Mae’s other plans is to expand rental options after the home has defaulted and implement a new “rent-to-own mortgage program”. Also, Freddie Mac continues to come up with loan modifications for borrowers to keep ownership. Qualified renters will get a month-to-month lease.
The idea of letting foreclosed homeowners rent their home has initially been proposed by Dean Baker, the co-director of the Center of Economic and Policy Research. This proposal aims to help distressed homeowners without needing a big amount of taxpayer money and without creating a motivation for a borrower to go on default.
The said programs aim to lessen record defaults and ease the housing market downturn.
As home prices fall, foreclosures rise due to borrowers finding themselves owing more than what their property is worth; thus, making them ineligible for financing. In fact, about 16 percent of all mortgages or 8.1 million are estimated to be foreclosed properties in the next four years without adequate government or lender interventions.
What can aide in keeping local property values on the average and promote a faster recovery of the housing industry is keeping foreclosed homes occupied and in good condition.
By Cassiano Travareli