Renters get foreclosure relief
How Freddie Mac's post-foreclosure rental program worksFreddie Mac's REO Rental Initiative is intended to:
Ease the impact of foreclosure on renters and former owners.
Since all rental agreements are month-to-month, tenants must be prepared to move out with little notice once the property has been sold. Tenants also are subjected to the typical disruptions of living in a home that's for sale: Realtors and prospective buyers who want to see the home inside and out may appear with or without warning as may an assortment of home inspectors, appraisers, repair contractors and so on.
- Give renters and former owners more time to consider their options.
- Help stabilize property values by keeping homes occupied.
- Help protect local communities by making homes less vulnerable to vandalism.
Details of Freddie Mac program
- Renters must pay market-rate rent or the rent they'd been paying to the former homeowner, whichever is less.
- Former owners must pay market-rate rent.
- Renters must show they earn enough income to afford the rent.
- Rent control and Section 8 will be honored, although additional documentation may be required.
- Rental agreements are month-to-month only.
- If the homeowner or property doesn't qualify for the rental program, the occupant will be offered relocation assistance.
- This program is open to current renters and former owners who occupy the property.
- No security deposit is required.
- The property must meet state and local rental property codes.
- Renters must agree to allow a sales agent to show the home to potential buyers.
Tenants typically have little effective recourse to recoup the rent or deposits they paid to the former owner of the home. Neither Fannie Mae nor Freddie Mac is likely to help since they weren't involved in the renter's agreement with the homeowner. Small claims court may be an option if the former owner's whereabouts are known; however, in most cases, such sums are simply lost.
Web site lets renters check up on foreclosure notices
Renters who want to find out whether a home has been the subject of a notice of default or foreclosure sale might want to try RentalForeclosure.com, a new Web site that offers this information.
Dave Madam, a Realtor with Prudential Americana Group in Las Vegas, founded the Web site with a partner to help renters avoid properties that are under a cloud of possible foreclosure. He says many people have moved out of one foreclosed property only to experience the same situation again due to lack of this information.
"It's mind-boggling," Madam says. "It doesn't matter what part of the country it is, the stories are the same: I just moved in or I've been here awhile, and this is the fourth time this has happened to me."