Fannie Mae's Tenants in Place program allows current renters in foreclosed homes to remain in the property. Owners in foreclosure can also rent back their homes from Fannie Mae if they successfully complete one of the agency's mortgage release alternatives. While Fannie Mae does offer foreclosed homes to investors as rental properties, it doesn't currently rent homes to new tenants.
Tenants Under Lease
Under federal law, tenants in foreclosed properties have until the end of their lease to move after a foreclosure. Some may have longer if their state laws provide better protection. Tenants living in a foreclosed home now owned by Fannie Mae may stay under their old lease. They must live in an eligible home at the time that it's foreclosed on, and must allow Fannie Mae to show the home to prospective buyers under the Tenants in Place Program. Homes that commonly qualify include one- to four-unit properties, condos and manufactured houses.
Federal law only gives month-to-month tenants 90 days to move after the rental property is foreclosed on. Fannie Mae's programs gives monthly tenants the opportunity to sign a new lease and remain in the home. They do have to cooperate with home showings and may choose between a month-to-month lease or a term lease with the agency. Fannie Mae sets rental rates based on figures from comparable area properties, but is still subject to any local rent control laws.
Borrowers who complete a deed in lieu of foreclosure through Fannie Mae may rent their former home back for up to 12 months. Using the deed, the owner gives the property back to Fannie Mae instead of going through the foreclosure process, but must follow the agency's rules and meet the program's requirements. Fannie Mae sets the rental rates based on comparable area figures for similar homes. Some homeowners may remain in the home for up to three months after the foreclosure rent-free, depending on their financial circumstances.
Fannie Mae uses local property management agencies to maintain its rentals, so those under foreclosure who wish to rent should consider the managing agency involved. A tenant who signs a new lease or continues an existing lease with Fannie Mae is bound to its terms, so the managing property agency can have an impact on life quality in the rental. Cash incentive programs are available to both owners and tenants in foreclosure for moving, but the amount and qualification requirements vary by situation.
- Know Your Options by Fannie Mae: Protecting Tenants at Foreclosure (PTFA)
- Know Your Options by Fannie Mae: Tenant-in-Place Rental Program
- Know Your Options by Fannie Mae: Mortgage Release (Deed-in-Lieu of Foreclosure)
- Housing Industry Forums: New Mortgage Release™ Program Offers a 'Powerful Foreclosure Alternative'
Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.