The new Deeds for Lease Program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under the program, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.
“This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Fannie Mae Vice President Jay Ryan said in a statement.
In interviews with the Associated Press, two members of the NeighborWorks America network had different takes on the new Fannie Mae effort to stave off foreclosures.
"It shows that you put your best effort to work out a solution," said Gabe Del Rio, director of homeownership at Community HousingWorks of San Diego.
However, Mike Himes, director of homeownership services at NeighborWorks Sacramento, said the industry should push harder to modify loans at lower monthly payments. “The preferred option is allowing people to retain ownership,” he said.