Fannie’s rental program was a first Fannie Mae initiated a rental option years ago, not only to keep renters of single-family homes out of a foreclosure that they did not cause, but to prevent more vacancies. Fannie reports its REO inventory by volume of properties. In the fourth quarter, it reported 162,489 in REO that needed to be resold, up 88% from the year before.
The lease agreements vary from month-tomonth or 12-month leases. A spokesperson for Fannie said the program went into effect before Congress passed the Protecting Tenants at Foreclosure Act, and was one of the first programs in the industry.
Prices for REO are also dropping along with the rest of the housing market. The governmentsponsored enterprise reported that REO net sales compared with the unpaid principal balance was 55% in the fourth quarter, down from 57% the quarter before. In 2005, REOs sold at 87% of the unpaid principal balance.
“These families have kids who have been in school districts. They have foundations in their communities, and we don’t want to uproot those families,” the spokesperson said.
The spokesperson said the main driver behind In California, Arizona and Nevada, Fannie holds the rental program has always been to keep the more than 33,000 properties in REO, nearly as home occupied and to keep from disrupting the much as the 35,000 in the entire Midwest combined. lives of those inside.
The rental program began in January 2009 and was a first for the industry. Tenants were given the opportunity to stay in the home for a fee comparable to the individual market. As of the end of February, Fannie Mae had more than 10,000 tenants in properties around the country with more than 1,500 more still considering the program.
Critics of the Protecting Tenants at Foreclosure Act point out that the servicing and REO industry cannot be transformed into landlords, but those instituting rental programs like these see a much more ominous threat to their businesses and areas. Though renting does pose challenges to their operations, vacant homes wreak havoc on prices, introduce crime and undermine the most solid hope the housing market is desperate to resuscitate: Homebuyer demand.
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