Fannie Mae has introduced a new Deed for Lease Program (D4L) 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.
The program provides an additional option for borrowers who do not qualify for or have not been able to sustain other workout alternatives, such as loan modifications.
‘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," says Jay Ryan, Fannie Mae's vice president.
Under D4L, borrowers transfer their property to the lender by completing a deed-in-lieu of foreclosure, and then lease back the house at a market rate.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.
Leases under the new program may be for up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A D4L property that is subsequently sold includes an assignment of the lease to the buyer.
You can view Fannie Mae's 09-33 servicing guide announcement, which covers servicers' responsibilities under D4L, here.
SOURCE: Fannie Mae