This article on Fannie Mae misstated the first name of the company's principal deputy general counsel. He is Curtis Lu, not Chris Lu. The text has been corrected below.
Fannie Mae to Let Renters Stay in Foreclosed Properties
Monday, December 15, 2008
Fannie Mae has agreed to let renters stay in their homes even if the owners of the properties have been foreclosed on, according to an announcement from the company yesterday. About 4,000 renters live in properties foreclosed on by Fannie Mae.
The move comes after the mortgage-finance giant came under pressure from a Connecticut legal aid group to end efforts to evict tenants who are able to pay their monthly bills but whose landlords have lost their buildings to foreclosure.
It represents another step the company is taking to keep people in their homes. Last month District-based Fannie Mae and McLean-based Freddie Mac announced that they would suspend foreclosures and evictions during the holiday season and introduced a program to modify mortgages of owners facing foreclosure. Freddie Mac hasn't announced a policy regarding renters.
New Haven Legal Assistance Association had threatened Fannie with a lawsuit if it did not amend its practices. Fannie said it would place a moratorium on evictions until Jan. 9 and then issue a policy to reach out to tenants in foreclosed properties, either signing new leases with them or helping them relocate. The details of that policy haven't been worked out.
"No renter should feel any apprehension of losing their home," Curtis Lu, principal deputy general counsel of Fannie, wrote in a letter to the New Haven Legal Assistance Association yesterday.
"We had seen bona fide renters who were current on their rent being forced to leave their homes," New Haven Legal Assistance attorney Amy Marx said in a statement. "We are delighted that Fannie Mae took our concerns seriously."
Marx and Lu's letters were copied to Fannie's regulator, the Federal Housing Finance Agency, as well as Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.).
Fannie owns only a small fraction of foreclosed properties in which tenants now risk evictions. It wasn't clear whether others would take similar steps.
"It is our hope that this new policy by Fannie Mae will serve as a model to private lenders and state legislators considering actions to assist renters who are being immensely burdened by the foreclosure crisis," said Shelley White, director of litigation at New Haven Legal Assistance.