Fannie Mae: No More Tenant Foreclosure Evictions

by Shannon Moriarty · 2008-12-16 12:31:00 UTC
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[Photo: A special deputy serves an eviction notice in Ann Arbor.]

Fannie Mae has taken a stand for tenant rights, announcing yesterday that tenants may stay in their homes even if their landlord goes into foreclosure.

This is an critical move that will prevent many renters from becoming homeless. Throughout the foreclosure crisis, thousands of unsuspecting tenants were put out on the streets when their landlord lost their property to foreclosure. In most cases, these tenants had been on time with their rent payments and had no idea that the landlord was in default.

The new policy goes into effect on January 9th. According to the Wall Street Journal, Freddie Mac is considering implementing a similar change.

Unfortunately, private banks do not have the same degree of flexibility as Fannie or Freddie. According to the Wall Street Journal:

Ted Meyer, a spokesman for Deutsche Bank, one of the biggest trustees of mortgage-backed securities, said Deutsche Bank isn't in a position to be able to follow Fannie's lead on foreclosures.

Deutsche Bank has no capacity to intervene, Mr. Meyer indicated, saying "the whole issue comes down to ownership" of the foreclosed properties. A given property "is held in trust by us but it is effectively owned by the hundreds or thousands of people that own a tiny sliver of mortgages in any one pool," Mr. Meyer said.

In any case, Fannie Mae has taken a step in the right direction in providing relief for renters. We'll keep our eyes and ears open to see if Freddie follows suit...

Shannon Moriarty has worked in various homeless shelters and service organizations around the country. She is a graduate student studying housing and urban policy at Tufts University.
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