Fannie Mae gives renters a break
Fannie changes policy, allowing renters to stay in foreclosed homes; no word yet of policy change from Freddie.
NEW YORK (CNNMoney.com) -- Fannie Mae, the battered mortgage giant, has agreed to act as an interim landlord for thousands of tenants living in foreclosed homes around the country.
Fannie (FNM, Fortune 500) will sign new leases for the approximately 4,000 renters in its foreclosed properties, said spokesman Brian Faith. These tenants would otherwise face eviction, even if they had been paying their rent on time, because of the owners' failure to pay the mortgage on the property.
The policy will go into effect on Jan. 9, Faith said. He said Fannie will observe an existing moratorium on new evictions. Both Fannie and Freddie Mac have agreed to temporarily hold off on evictions.
"Hopefully, this is a signal to the private sector that tenants have rights," said John Taylor, president of the National Community Reinvestment Coalition, an advocacy group. "What we don't need to be doing, during the economic crisis, is to create additional stresses on our housing industry by evicting tens of thousands of families who are paying their rent."
Freddie may follow suit
Freddie Mac (FRE, Fortune 500), the other government-backed mortgage giant, has not announced any changes, but a spokesman hinted that the company is developing a new policy.
"We are working through the operational details to provide something by January," said Freddie spokesman Brad German.
German said it was in his company's best interest not to evict responsible renters.
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