Many of the tax incentives and benefits provided to homeowners through the federal government and lending industry are a good thing… they support homeownership.
The question is: When is it good for you and when is it good for them?
Fannie Mae has launched a new program this year to keep home owners in their homes instead of foreclosing, referred to as a Deed for Lease program.By inducing the homeowner to complete a deed-in-lieu of foreclosure and allowing the homeowner to stay in the home and rent it back. On the surface this appears to be a truly benevolent move on the part of Fannie Mae.So let’s look at the two sides of the coin.
The homeowner is spared a foreclosure or short sale process and that in itself is a significant advantage in alleviating mental anguish.The homeowner will not have to move, at least not immediately and that is good for the family.
Downside for homeowner:
Homeowner is now a tenant and will be forced to move at some point in the future.
Homeowner as a Tenant does not have the same tax advantage as a homeowners.
Homeowner still has a foreclosure on their record for 7-10 years (deed of lieu – still is a foreclosure) basically like a voluntary repo VS a repo, a car is still reposed and it is still on your credit.
Homeowner has just delayed the disruption of their family and life.It will happen all over again and they will re-live the pain when given notice to move. The home belongs to Fannie Mae and they are nothing more than a tenant.
Fannie Mae is spared the cost of going through a foreclosure and the upkeep and maintenance of the property along with the exposure to any vandalism of the property (a very substantial expense).Fannie Mae will now collect rent on the property.Fannie Mae now has time to look for a buyer or investor that may be interested in buying the property for either resale or as a landlord.
Upside for Fannie Mae:
Did not have any expense of a foreclosure.
Took property back but will have income coming in on it until they choose to sell.
Have someone in the home which will keep it from being vandalized, while waiting for prices to increase so they can sell for more.
Have someone paying utilities and keeping property maintained while waiting for the prices to increase.
For more detail information Google “Fannie Mae Rent Back”
