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Fannie Mae Plans To End Rental Evictions

From the Wall Street Journal:

Fannie Mae to End Tenant Evictions in Foreclosures


December 15, 2008

Fannie Mae is finalizing a national policy that will allow tenants to remain in their homes even if their landlord goes into foreclosure — a landmark decision for tenants.

The policy will be in effect Jan. 9, Fannie Mae said Sunday, and reflects growing pressure on the mortgage company from a legal-aid group that threatened to sue over recent evictions. The company said it will also ensure its current holiday moratorium on new evictions is being followed until the new policy takes effect.

“We’re delighted that Fannie Mae has agreed to change their policy,” said Amy Marx, an attorney with New Haven Legal Assistance in Connecticut. “And we’re hopeful others will follow suit.”

In late November Fannie Mae and Freddie Mac said they would suspend tenant evictions temporarily during the year-end holidays. New Haven Legal Assistance said that despite the pledge, Fannie Mae was proceeding with more than a dozen new eviction cases in Connecticut. The advocacy group said the evictions would violate legislation passed earlier this year to rescue the two mortgage-finance giants that required them “to permit bona fide tenants who are current on their rent to remain in their homes under the terms of their lease.”

In his letter Sunday to the New Haven group, Fannie Mae General Counsel Curtis Lu wrote: “As far as we know, this will be the first nationwide program of its kind.” Copies of the letter were sent to Christopher Dodd (D., Conn.), chairman of the Senate Banking committee and Barney Frank (D., Mass.), House Financial Services Committee chairman.

Freddie Mac hasn’t announced a similar policy reversal, though a spokesperson said they are “currently evaluating additional actions.”

The decision by the government-backed mortgage giants represents just a slice of the market and excludes many properties purchased with riskier loans that are now falling into foreclosure. Fannie Mae and Freddie Mac, however, are uniquely structured to be able to address the issue, which effectively now has them acting as a type of landlord or property-management company to administer month-to-month leases to renters of their foreclosed properties

A New York University study found at least 15,000 renter households in New York City were affected by foreclosure last year. Since then, the number likely has increased. In the Boston area, a group of Harvard University students has been going door to door notifying tenants of their rights in an eviction; many such tenants are unaware of their rights and accept “cash for keys” offers from lenders — often $500 or $1,000 — to leave.

“We had seen the devastating impacts of Fannie Mae offering cash for keys to tenants and evicting most of the rest,” Ms. Marx said. “We eagerly await the implementation of the new policies.”

This looks like a perfect candidate for the law of unintended consequences.

Do we really want the federal government to become a landlord?

This article was posted by Steve on Monday, December 15th, 2008. Comments are currently closed.

7 Responses to “Fannie Mae Plans To End Rental Evictions”

  1. Helena says:

    Oh, excellent. Fannie Mae, the government entity that has effed up everything is going to get a whole new – and enormous – new department that will ensure a sprawling globulous blob of new regulations, and more and more entrenched bureaucrats. Fannie Mae: the nightmare on Wisconsin Ave.

  2. Liberals Demise says:

    Nothing like a “SLUMLORD” bailout….what the hell is next? Government bailout of “OUTTA WORK” Crack Dealers,Pimps and HOs’?

  3. proreason says:

    Fannie Mae…..your government in action.

    It’s good to know we have this crack agency on the case.

    What could go wrong?

  4. JohnMG says:

    …….”“We’re delighted that Fannie Mae has agreed to change their policy,” said Amy Marx, an attorney with New Haven Legal Assistance…..”

    Well, at least there is no violation of truth in advertizing involved with New Haven Legal Assistance. What name could be more appropriate for the policy they advocate than ‘Marx’?

  5. Helena says:

    So – – – – When a tenant needs a plumbing repair, which government agency do they call? And are the managers of these government owned properties going to become federal employees, with federal employee-type health insurance and pensions? This is a nightmare.

  6. proreason says:

    “This is a nightmare”

    Cunningly ambiguous, Helena.

    Are you talking about this particular new abomination with Fannie Mae, or our ever-caring government in general?

  7. Helena says:

    Our “ever-caring” government is a parasitic growth. It is nothing in itself, it feeds on the people, and it grows. It creates nothing. Its only purpose is to preserve itself: to feed and grow. This new abomination is especially an abomination because it means a very fast growth spurt. When the parasite gets too big, the host gets sucked dry.

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