On Thursday, ""Freddie Mac"":http://www.freddiemac.com announced the official launch of its new REO Rental Initiative, giving qualified tenants and former owners the option to lease their recently foreclosed properties on a month-to-month basis. The REO Rental Initiative will be managed by ""HomeSteps"":http://www.homesteps.com/, Freddie Mac's national real estate unit, and implemented through several national property management firms.
Freddie Mac also said it will continue to suspend all eviction actions until April 1, 2009 to ensure there is ample time for current occupants to learn about the options available to them under the new initiative.
Ingrid Beckles, SVP of default asset management at Freddie Mac, said, ""Freddie Mac's REO Rental Initiative can help ease a foreclosure's impact by giving renters and former owners more time to determine what options are best for them and their families. At the same time, the REO Rental Initiative helps stabilize property values and local communities by keeping homes occupied and less vulnerable to vandalism.""
Starting today the property management firms employed by the GSE will begin the process of contacting occupants of foreclosed properties to determine their interest in staying in the home and their eligibility for a month-to-month lease. Occupants will be contacted only after the foreclosure gives Freddie Mac the legal authority to offer a lease.
To qualify for a lease, the tenant or former owner must occupy the property and show they have adequate income to pay the monthly rental amount established by the property management company based on market rental rates for the area in which the home is located. Occupants must also agree to allow HomeSteps to show the home to potential buyers to market the property for sale during the lease period. In addition, the home must be kept in a safe, habitable condition and meet all local codes for rental properties to qualify for the REO Rental Initiative.
If an occupant does not wish to lease the property, Freddie Mac said it will continue its current practice of offering relocation assistance. Freddie Mac said it will also continue to explore available workout options after the company gains title to the property through foreclosure, which may enable owner-occupants to retain ownership of their homes by reinstating their mortgage with modified terms.
Freddie's sister company, ""Fannie Mae"":http://www.fanniemae.com, has also employed a similar national REO Rental Policy. However, Fannie's rental initiative applies only to tenants of its foreclosed properties, not to mortgagors.