Renters will get their own bailout from mortgage giant Fannie Mae, which said Monday it was finalizing a nationwide plan to keep renters in their homes even if the property’s landlord faces foreclosure.
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Property renters until now have been collateral damage of skyrocketing foreclosure rates and a crumbling residential real estate market. In some cases, renters have been unaware that their landlord was about to lose the property, said Sally Scott, co-chairwoman of the Baltimore Homeownership Preservation Coalition.
Scott said between 25 and 30 percent of foreclosures in the Baltimore area involve rental properties, according to city estimates.
“Certainly more can be done, as Fannie Mae is doing, to help renters with landlords facing foreclosure,” Scott said. “People are extremely vulnerable, and at a time when people are facing other stresses.”
The government-controlled Fannie Mae will allow renters living in properties foreclosed by the company to sign new leases with Fannie while the home is up for sale, or get cash to move into a new home, firm spokesman Brian Faith said in a statement.
It was unclear whether Fannie Mae would manage the properties itself or contract those responsibilities out.
Earlier this year, Baltimore City instituted a more thorough process of notifying renters when their landlord faces foreclosure.
Last month, Fannie and Freddie suspended foreclosure sales and evictions on occupied single-family homes through Jan. 9. Faith said the new program would go into effect before that date, and counterpart company Freddie Mac said it plans to have a similar policy in place by early January.
“We will continue working to fully support the market and undertake efforts aimed at keeping people in their homes,” Faith said in a statement.
The Fannie Mae program is expected to help 4,000 renters nationwide, but could spur other lenders to assist renters, Smith said.
“It’s not a terribly big number nationally, but it’s a significant precedent that others could choose to follow,” Smith said. “[But] I think it involves the lenders in a different line of business.”
The number of foreclosure events in Maryland, including default notices, auction notices and bank repossessions totaled 7,974 in the third quarter, according to data released by online foreclosure marketplace RealtyTrac.
