Housing – As predicted, Fannie director outlines Section 8 rental plans for foreclosed homes…in HOA communities…

Update: and plus, now Uncle Sam as the biggest renter/landlord in the US is artificially setting ‘free market’ fair market!? rental rates for the country, starting in the sand states, recall they are 90% of the mortgage market now the GSEs…so the investors buying houses here cheap to use as rentals now have to compete with Uncle Sam setting cheaper rates…another reason not to buy RRE just what the markets needed..not.

Update: So think about this. Let’s say you were vehemently opposed to your neighbor getting a principal reduction and staying in the house as an owner, maybe you thought that was ‘unfair’.

Okay, so now, your neighbor (or most likely your neighbor is gone now and it is a stranger), will move into that house next door and pay ‘market rental rates’, which are way lower than the perceived unfair break on mortgage payments right?

And then consider this person may in fact be a Section 8 low income housing aid recipient. Further consider this is in your gated community in which you pay exorbitant HOA fees.

Well your FAN rental neighbor will not be paying those fees, will not have the incentive of your previous OWNER neighbor to maintain property and will likely be exempt from those pesky HOA restrictions on property maintenance, after all FAN, Uncle Sam is the ‘owner’.

While Geithner and Donovan are telling Congress just THIS WEEK they have no plan for FAN FRED, FANNIE is announcing their move to become the biggest rental landlord in America, and they are going to bust gated communities in the process.

You think this is the better way to go? I think you’re nuts.

Original Post: Knew it. That woman who said Obama would pay her house and gas is laughing someplace now. In a gated community no less.

HousingWire:

The director of Fannie Mae’s  deed for lease (D4L) program outlined the initiative during Thursday’s Texas Mortgage Bankers Association (TMBA) servicing conference.

Miguel Gutierrez said the goal of Fannie Mae is to minimize family displacement for borrowers that participate in a deed-in-lieu of foreclosure program, launched early in November 2009, while managing it in a way so as to not put any undue pressure on Fannie’s ever-growing rental portfolio.

The homeowner-turned-renter is required to pay fair market rent to stay in their home for up to 12 months. The renter must have enough income to sustain a 31% income-to-rent ratio and rental payments are not subsidized by Fannie Mae, but could include renters eligible for Section 8 payments.

The example the FANNIE Director gave is an HOA community here in Phoenix:

As an example, Gutierrez outlined the situation for a fictional family that purchased a $275,000 home in Phoenix with a $247,500 mortgage and a down payment. Including homeowner association (HOA) fees, their monthly payment was $2,050. While those payments were manageable five years ago, the sample borrower had reduced income from his job and HOA fees had increased. Unable to pay their mortgage, the borrower joined the D4L program, reducing their rent to $1,000 while the family continues to look for additional income and/or alternative housing.

The upside of the program for Fannie Mae, Gutierrez said, is promoting neighborhood stabilization, mitigating real estate owned (REO) costs and provides the opportunity to consider other REO strategies, such as maintaining longer rental terms.

“With these benefits to Fannie Mae and borrower, we find the deed for lease program is an effective solution for these properties,” Gutierrez said.

There are some requirements for the new renters’ eligibility. Property managers inspect the home to ensure it is well maintained, generally an indication the renter will continue to keep the property in good repair during the lease term. The house must be eligible for lease; many times HOA rules don’t allow a home to be rental properties.

The program marks a significant shift in the strategy for the government-sponsored enterprise. Whereas Fannie Mae would previously dispose of properties in a traditional REO sale, now Fannie is becoming a landlord. Gutierrez said that’s a position Fannie is prepared to be in for the near future.

“We’re building a rental portfolio and the strategies are going to differ depending on the market. In some markets we’ll take a long view and want to hold onto the rental properties for some time,” he said. “In other markets, we may decide to reduce in our inventory. But in some cases, it’s possible some of these tenants will be able to stay in these homes for a few years.”…

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April 16, 2010. Tags: , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Popular Culture, TARP, Taxes.

8 Comments

  1. paphapaskgync replied:

    thanks! :)

    lets write them until the admit it, or stop doing it! i am writing them now!
    :)

  2. Pruntyrurgy replied:

    thanks a lot for such a nice info.

  3. Housing/FinReg: $1B for Federal Bridge loans for unemployed homeowners – HEMAP « Moderate in the Middle replied:

    [...] program under which homeowners rent their homes back from Uncle Sam. And the Section 8 roll out is already underway and by the time we get 6 months into ’11 when Timmeh claims we will have an outline for their [...]

  4. phnxrth replied:

    I live in a housing community where landlords are renting to Sect. 8’s. So you could end up with a fire captain living next to a band of thugs.
    So the professional can help the less fortunate, right? You learn very quickly these people don’t want help. That’s why they’re Sect. 8. But they will cause every kind of strife imaginable and wreck property values even more than they already are. Plus the landlords are often deadbeat.
    Not to use scare tactics, but it’s a very big problem unless you have a good HOA. I don’t. Best bet is to go head to head, create disincentives and make them want to leave (without doing anything illegal, of course.)

  5. ginaswo replied:

    this is just a disaster. the total destruction of housing as we know it, and it seems to be a feature, not a bug. it is like they get up each day and say what part of the economy can we totally frak up today?! thank you for the feedback!

  6. phnxrth replied:

    I do want to make one more comment. If you find as I did, that the Sect. 8 folks you’re dealing with believe the power of wrong gets them special advantages in life, and you find these are people who function at an automatic/instinctual level, you can consciously use the power of right to confront them with a choice. You don’t have to say a word. They will know what you’re doing.

    If only a handful choose to go the right way over the course of years, it will improve the whole lot. A little right is much more powerful than a great amount of wrong.

    This was the formula that worked for me in dealing with Section 8 folks.

  7. phnxrth replied:

    One last word of caution since I just dealt with Sect. 8 folks. They will do everything in their power to bring you down to their level. In our case they threw trash in our yard about 50 times, created unbelievable commotion, one threatened me with physical violence. Violated every HOA reg repeatedly. Every interaction would involve them being combative, twisting anything that was said or done, and outright lying.
    When people get pulled in, next thing you know everybody’s got secrets and the problems spread like wildfire.
    It’s easy to knuckle under. They’re expert at creating disruption, chaos, an atmosphere in which it’s all but impossible to remain calm and think clearly.
    Voila! Urban blight. You will have to stand up and bring creativity to the table. We all see how much our manmade laws can do to solve these problems.

  8. ginaswo replied:

    So sorry to hear this, that is horrendous., You spend so much and have HOA rules and they are just trashed like the property. unreal. God Bless.

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