“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "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."
Last year saw foreclosures grow at an alarming rate. This has pushed the hands of both the government and private sectors to seek a solution for curbing the ever increasing numbers of foreclosures. The moves have produced mixed results as the number of foreclosures has steadily decreased albeit numbers still remain high.
Eligibility Requirements
Homeowners hoping to take advantage of the program are obligated to prove their financial ability to make the new payments. When the homeowners switch from mortgage to rental payments, they must prove that their rental payments don’t constitute more than 31 percent of their current income. Homeowners who opt for contract changes have the choice of renting their homes for up to 12 months with the choice of extending the lease on a monthly basis. This program is intended to provide homeowners who are in danger of foreclosure a gracious way of exiting their homes.
Mutually Beneficial
This program represents a better option for both homeowner and the mortgage company. Houses are being left in such a sad state that some homes plumbing and electrical are being cannibalized. This has many banks left with huge inventories of foreclosed properties which they have not been able to sell because of the sad state homeowners have left them. The recent drop in home values nationwide has only made these properties values drop to rock bottom prices.
The emotional and psychological stress of leaving is certainly devastating for homeowners who have invested years in their homes. Providing a decent alternative of continuing to live in their homes by renting gives homeowners a more comfortable way of planning for their future.
The “Deed for Lease Program” is an independent endeavor of Fannie Mae and Freddie Mac. However, the program does not address the underlying causes of foreclosures which still plague the housing market today.
Final Four Steps to Buying a Home
Buying a home can be exhilarating, but it is also a serious process. If you’ve taken the first steps to become preapproved and you’ve found the perfect house that you can afford, then it is time to take the final four steps to buying a home.Reverse Mortgages
With the current economic difficulties, a lot of homeowners are finding themselves defaulting on their monthly mortgages or worse in danger of foreclosure. Retirees and senior Americans particularly are one of the hardest hit sectors of the population. With rising healthcare cost and the value of their pensions dropping making the next mortgage payment is becoming more and more difficult.Advantages and Disadvantages of Reverse Mortgages
As the term implies, Reverse Mortgages are funds which are released to a home owner based on the equity they have made based on their mortgage payments. In typical mortgages, payments are made on a predetermined amortized payment to the lending entity. Reverse mortgages release these equity built thru years of monthly payments to their homeowners. In this type of loan, homeowners are not obliged to make payments only that when the owner dies all rights are transferred to the lending institution.