mortgage

Rent your own home

How to qualify for Deed for Lease program

Such controversies aside, here's a summary of the rules:
  • The D4L program is open only to homeowners who have a conventional Fannie Mae loan.
  • The homeowner must be unable to afford the mortgage payments or qualify for a loan modification. Homeowners who want to walk away from their mortgage only because the value of their home has declined aren't eligible.
  • The loan cannot be guaranteed or insured by the Federal Housing Administration, U.S. Department of Housing and Urban Development, Veterans Administration or Rural Development agency of the U.S. Department of Agriculture.
  • The homeowner must have made at least three mortgage payments since the loan was originated or last modified and cannot be 12 or more payments past due on the loan.
  • The homeowner must sign a deed-in-lieu to give up ownership of the home, a general release of any claims related to the loan or home, and a lease agreement, which may have a term of up to 12 months.
  • The deed-in-lieu will be reported to the credit bureaus as such, which could result in slightly less damage than a foreclosure to the homeowner's credit.
  • The homeowner must be able to deliver title to the home free and clear of any second mortgage or other lien.
  • The home must be the principal residence of either the homeowner or a renter who agrees to the terms of the new lease. Second and vacation homes aren't eligible.
  • The homeowner must be able to pay market rent, and that rent cannot be more than 31 percent of the homeowner's income. Homeowners who have no source of income aren't eligible.
  • The rental applicant (i.e., homeowner or renter) must pay a nonrefundable $75 application fee, which will be applied to a credit report and background check on the occupant of the home.
  • The home must be inspected and the cost of needed repairs must be deemed acceptable based on the home's value.
  • The rental income must be high enough to pay Fannie Mae's anticipated maintenance and management costs.
  • The renter must agree to be responsible for regular maintenance and to keep the home in good condition.
  • Renters' insurance is required if the renter has a pet in residence.

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